Best 5 Reasons To Avoid Loan Sharks
Whilst loan sharks can provide you with quick cash when you’re in need of an urgent loan, they could be the start of sending you into a debt spiral.
So if you get the “I need a loan shark” thought in your head dismiss it quickly as their are better options available.
It’s also so easy to find loan sharks online making them very accessible to anyone & very tempting to use if you can’t get loans through traditional banks & credible money lenders.
One thing’s for sure, if you are going to borrow money from loan sharks in Johannesburg or Pretoria or anywhere else in the world, you had better be more than 100% sure that you will be able to make the loan repayments in time.
Warning: Loan sharks are not well known for relaxing their repayment terms if you’re having trouble coming up with the money.
- Loan sharks (even the so called “licensed loan sharks”) charge extremely high interest rates for their loans.
- They can also use threatening or violent tactics to ensure repayment.
- The loan shark money lending industry is often connected to a criminal operation such as the mafia in the USA.
- In some countries, like the UK, illicit loan sharking is considered a serious crime due to its links to the criminal underworld & the violent nature associated with its debt collecting methods.
- Parallels have been drawn between payday loan lenders & loan sharks whilst the former is generally seen as a legal entity especially as no threats of violence or blackmail are associated with repayment. This despite the interest rates of payday loans being just as high as those of loan sharks in many cases.
How Loan Sharks Almost Ruined This Woman’s Life
This scary story, reported by Fin24, relays how a young woman almost had her life destroyed by a loan shark.
It all started after her father died & she needed money urgently to pay for his funeral.
Unfortunately she didn’t have a funeral policy or any savings that she could use to give him a dignified burial so she approached a loan shark to borrow the cash.
All she needed was R6,000 but as she was unemployed at the time she knew she wouldn’t have any success with traditional lenders so, in desperation, she borrowed the money from a township cash lending business.
What happened next?
After handing over her ID document & signing a whole bunch of papers, which she didn’t have time to read, the received the R6,000 in cash a couple of days later.
It turns out that she had unwittingly signed over her house to them in the event of her not paying & eventually ended up paying them about 10 times the amount of the original R6,000 loan.
She was afraid of them selling her house & keeping the full amount as well as a story of a friend of hers being beaten up by them for not paying timeously.
In order to make the payments she had to move out of her house & rent it to get some money in whilst sharing a place for her & her children to live with someone else.
It was an expensive & painful lesson for her and unsurprisingly she says she will never approach a shady money lender, aka loan shark, again.
Reference: Fin24 – http://www.fin24.com/Debt/YourVoice/One-womans-loan-shark-nightmare-20150522
Safer Loan Options
- You can apply for unsecured personal loans through reputable loan providers with a good chance of being approved even if you have a poor credit history.
- Payday loans, although they often come at a high interest rate, are an option if you need an urgent loan to get you through until payday. Your credit history, good or bad, should not affect your success in getting payday loans.
- Make sure that whichever loan provider you apply with, that they are registered with the National Credit Regulator to ensure that you have some protection from being charged unrealistically high interest rates & fees accompanied with tough repayment terms.
- Always ensure that you are happy with the terms & conditions of your loan agreement before signing it.
- If it’s a student loan that you need urgently there are better options for this type of funding.
- Lastly, avoid the temptation of quick & easy money offered by loan sharks as you could end up in a life long debt trap or being subjected to threats of violence if you’re late with your repayments.
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