Published on May 31st, 2021 | by Bibhuranjan0
The Danger Of Lending Money From Loan Sharks
A loan shark in a company or an individual that performs the unethical and sometimes illegal practice of lending money to people and then charging interest rates that are outrageously high. In fact, the very worst of them operate with interest rates at 100 percent.
The way in which they get their money back from a lender is through threats of physical violence, actual physical violence, along with various other illegal activities. Some are even known to take away people’s personal documents or forms of ID in order to guarantee that they repay what they borrow.
A lot of the time, they target certain victims who they know are in financial difficulty and offer them their services, obviously without telling them about their practices should they fail to pay back all of what they have been leant. These are usually poorer people, minorities, or just people who they know would not go to the police for help once their unethical and illegal practices start to materialize.
How do loan sharks differ from payday lenders?
The most obvious difference is that a legitimate payday lender, unlike a loan shark, will not use unethical and / or illegal means of getting their money back from a lender. If you for whatever reason struggle to pay back a loan to a payday lender, then you can, in the worst case scenario, declare yourself bankrupt and all your debts will be cleared. This is something that does not happen with loan sharks and if you could not pay the money that you lent back, then they will, most likely, illegally repossess some of your assets. The loan sharks will most likely also charge you further fees and put you even further into debt.
Why do people use loan sharks?
The main reasons are the convenience, ease, and the speed at which they can get their hands on the money (instantaneously). There is no need for a credit check and there is very little in the way of criteria for being able to lend money from loan sharks in Ghana. Because of this, it attracts those people who may be in a country illegally and cannot get loans through traditional means, or those people who have such bad credit ratings that no bank or financial institute would ever lend them money. A lot of the time people are desperate and do not know where else to turn.
How do you know if you are lending from a loan shark?
A way of knowing if a lender is a loan shark is by looking out for some of the following red flags:
- A lack of official paperwork
- There is no mention of interest rates or disclosure info
- An unwillingness to settle debt
It is important to be aware of the way in which some loan sharks differ, with some operating only online, whilst others do actually have a physical store or office that you can go and visit. So just because they have a brick and mortar location, do not take it as given that they are a legitimate lender.
Photo by Frederick Warren on Unsplash