How to Spot a Loan Shark

Are you worried about borrowing money from the wrong type of lender? Are you concerned that you could get caught up in a deal with a loan shark? If so, you are not alone.

As unfortunate as it may be, there are “lenders” out there who prey on low income, desperate individuals who are in need of a loan.

At first, these lenders appear to be on your side. They will do whatever they can to answer your questions, and of course, lend you the money you are seeking.

On the surface, the benefits of working with this type of lender may be appealing:

• Your credit score will have little to no impact on your ability to receive a loan
• There is minimal paperwork involved with the application

As the old saying goes, “this is too good to be true.”

These lenders are known for all the following:

• Increasing your debt without reason
• Refusing to give you information related to the loan, such as the interest rate
• Asking to take items, such as passports or bank accounts, as “security”

If you keep making payments as required, loan sharks most often times remain friendly. Miss a payment, however, and you never know what the lender may try.

What are the risks associated with borrowing money from a loan shark?

• You will pay a far greater amount in interest than you would through a reputable lender
• If you miss a payment you will be harassed, with this often times turning towards intimidation
• It will not be long before the loan shark is pressuring you to borrow more money

As you can see, these risks far outweigh any potential benefits.

Now that you know more about risks associated with conducting business with a loan shark, it is time to learn how to spot these predatory lenders. Here are a few telltale signs:

• No paperwork or documentation
• Increase the amount of debt owed without your permission
• Will not allow you to payoff the loan early
• “Dance” around questions related to the loan you are applying for
• Unwilling to tell you the interest rate

Regardless of how desperate you may be for a loan, it is imperative that you only do business with a reputable lender.

This advice should help you spot a loan shark, allowing you to avoid these predatory lenders at all costs.