Loan sharks and illegal lending are seen by many as the same thing, and they use the terms interchangeably. Rightly so. It seems, though, that there is a slight difference between the two. It’s in what they look like. Loan Sharks can be divided into 2 main categories, “legal” lenders and illegal lenders. Both are sharks seeking to exploit those in desperate financial situations and to profit from their debt, thus illegal.
Loan Sharks
A loan shark is a person or body who offers loans at extremely high-interest rates. They come in the form of “legal” lenders, that adhere to the rules – but, they make false promises by making you sign seemingly legitimate contracts that in the end, can be your worst enemy if you were to default. They make their money by hidden fees and costs.
Illegal Lending
Gangsters, these people are money-greedy, trying to profit from those in desperate situations. Although they have no right to lend money with interest, they impose astronomical interest rates to borrowers in despair and are known to often use violence and blackmail to get their way.
We split loan sharks into two categories to pinpoint what form they’re masking themselves in. They are unlicensed money lenders who charge very high interest rates, sometimes using intimidation, harassment, threats and violence to frighten people who can't pay back their loan. They often pressure people into borrowing more from them to repay one debt with another. If a lender doesn't have a formal accreditation, don't borrow money from them!
The best advice in dealing with loan sharks is - don’t.
fincheck
