When you are in the market for a loan, you have some different options to consider. There are plenty of traditional lenders and loans out there, but those are typically reserved for people who have good credit and who can prove that they are worthy of such financing. On the other hand, some less reputable lenders have taken a different approach to the industry. They seek out desperate borrowers and those who might not be able to find other financing and offer them options that are much more costly—and not just when it comes to the fees.
Loan shark interest rates and fees are what get these people paid. Some people wonder if loan shark laws keep people from being exploited, but despite the best efforts to regulate lending, these predatory lenders are still finding a way to get to people. Loan sharks work in unique ways, but their biggest MO is fear and sheer force of will. Intimidation is how they get people to pay, and although it’s not quite like you see in the movies, it’s also not a nice practice, to say the least. Borrowers often find loan sharks on the dark web.
Is Loan Sharking Against the Law?
Technically, loan sharking is illegal. Predatory lending, if it can be identified, is against the law, and companies can be prosecuted and held accountable in several different ways. Unfortunately, as mentioned above, there are a lot of legal loopholes and exceptions in the lending industry that somehow allow these lenders to still sneak around the rules and go after desperate borrowers.
Loan sharking is an expensive business, but it’s not going anywhere. Whether or not loan sharks are legal, they’re out there and they aren’t people that you want to work with. If you need help financially and you can’t find a lender, consider asking friends and family, or talking to your own bank about how they might be able to help. You can also compare a bad credit installment loan vs. a loan shark here.
A lot of people will go straight to trying to find a loan shark business, thinking that the fees can’t be that bad or that it doesn’t matter because they need the money, but you really should explore all of the avenues that are out there. There are more than you think, too.
So, How Does a Loan Shark Work?
Loan sharks work on the concept that they can charge higher fees or require more collateral for those who need financing because they have limited options. Some loan sharks will have astronomical interest rates and require people to spend a small fortune to get a loan. Others will expect immediate repayment, which is almost impossible for those who are already in a tight spot, creating a vicious debt cycle that some people can never get out of.
Loan sharks, more commonly known as predatory lenders, get away with their operations because they’re able to blend in well enough and follow the rules so that they can profit from people’s misfortune. They specifically target people with poor credit, who have lost jobs, or who are otherwise in a desperate financial position, and then they try to get them to take on loans that they really can’t afford in the first place.
The best thing that people can do to avoid high loan shark interest rates and fees is to avoid the lenders altogether. If you find yourself in a financial emergency, investigate all of the options that you have besides predatory lenders. These lenders shouldn’t be your last resort—in fact, they shouldn’t be on your radar at all. Avoid them at all costs because no matter how desperate your financial situation might be, it’s not worth the stress and high price of predatory lending.