Why Do People Still Take Loans From Loan Sharks Despite Banks Having Lower Personal Loan Interest Rate
You must have surely heard of loan sharks even if you havent seen them. Loan sharks are the money lending predators of the financial world. Loan Sharks are people who offer loans similar to NBFCs, financial institutions, and banks. However, loan sharking is illegal and the interest rates applied by them are extremely high. Despite the outrageously high interest, there are many people who still turn to loan sharks in need of money. Still, why do such people willingly refuse the benefit of attractive personal loan interest rates of other lenders? Well, despite the extremely high interest rates, people have a few particular reasons for doing so. So, here are the reasons of availing loan from a loan shark.
Loan Sharks And The Law
Although some loan sharks resort to intimidation and even violence, theyre not beyond the law.
Any lender authorised or not who harasses you is breaking the law.
Some loan sharks will threaten you by saying youll be prosecuted and even sent to prison if you dont pay up.
This cant happen an unauthorised lender such as a loan shark doesnt have the legal right to make you pay back the loan back at all. This is because the loan itself is illegal.
Loan Sharks In Singapore Have Been Keeping Up With The Times Watch Out For These Scammy Tricks To Avoid Dealing With An Unlicensed Money Lender
As technology advances, so do criminals. And theres been a spate of unlicensed money lenders or loan sharks in Singapore who have kept up with the times.
In fact, some of them use tactics so subtle and sneaky, Singaporean borrowers dont even realise theyre dealing with loan sharks. Heres what to watch for:
Read Also: How Long For Sba Loan Approval
Stick To Legitimate Loans From Banks
The interest rate on a personal loan, from a proper bank, is only around six to nine per cent per annum. This can be repaid. Loan sharks have extortionate interest rates, and some make it flat out impossible to repay them.
Furthermore, if you absolutely cannot repay the bank, physical harm will not come to you. However, a loan shark may not hesitate to beat you up or burn down your house.
No matter how strong the temptation, do not turn to loan sharks. And do not pursue exotic financing options from unregulated companies. Remember, not all loan sharks walk around carrying sticks, and meeting in back alleys.
If you need to find the cheapest legitimate loans in Singapore, check out the best options at SingSaver.com.sg.
Is Predatory Lending Legal
To answer this, you must first define predatory lending. Most federal laws that target predatory lenders focus on payday loans. These are short-term loans with very high interest rates that the borrower promises to pay back using their next paycheck.
The problem is that more than 80% of borrowers arent able to pay back the loan under those terms, which creates a balloon penalty that makes the loan even more expensive and begins a debt cycle that can extend for months or years.
And its all legal. Well, in most states.
Laws that protect borrowers from these types of debt have recently been repealed, opening the door for more lenders to enter the space. The hope is that opening the marketplace to new lenders will create competition that lowers interest rates but thats all speculation at this time.
Still, some laws aim to help consumers get access to fair and equal lines of credit. Among them are the Equal Credit Opportunity Act , which makes it illegal for a lender to impose a higher interest rate or higher fees based on a persons race, religion, sex, age, marital status, source of income, or national origin.
The Home Ownership and Equity Protection Act protects consumers from excessive fees and interest rates. Additionally, 25 states have anti-predatory lending laws on their books, and 35 states limit the maximum prepayment penalty that a homeowner must pay on their mortgage.
Don’t Miss: 18009460332
Are There Loan Sharks In Philly There Are No Payday Loans Here And I Need A Loan For 6000 Will To Pay The Necessary Interest
Are there Loan sharks in Philly? There are no payday loans here and I need a loan for 6000. will to pay the necessary interest.?
Answer : I would recommend one to try this web page where you can compare from the best companies: .
Read: Commentary: Coronavirus Crisis Lays Bare The Risks Of Financial Leverage Again
HELP THOSE WITH LITTLE INCOME TO RECEIVE FINANCIAL SUPPORT
Perhaps it is worth diving into the characteristics of someone who may be the target of such loan shark operations.
While there is little public data on this, it is reasonable to surmise that low-income earners with few savings, a low credit score and little recourse to friends and relatives who can loan them money, may make look for alternatives that are unregulated for easy and quick access to loans.
When he or she urgently needs cash, they may turn to loan sharks in desperation. This is especially since loansharks these days can disguise themselves as a legitimate credit organisation with professional looking websites.
Such efforts often conceal their suspiciously less stringent lending rules that banks have to protect themselves and borrowers from having too much credit on their hands.
Without such legal obligations and responsibilities, loan sharks appear to offer hassle-free applications and easy credit to lure unassuming victims.
When such borrowers run into trouble, they are also reluctant to turn to authorities for help to resolve the dispute when it involved illegal moneylending activity.
Grappling with stigma, these borrowers then open themselves up to further extortion and violent debt collection tactics.
HOW TO CATCH A LOAN SHARK
Strong law enforcement and public education should be welcomed to suppress and deter illegal practices.
Read Also: Usaa Car Loan
The Sell And Buyback Trick
This was common in Malaysia in the 1980s, although regulation has now made it more difficult. Nonetheless, some millennial loan sharks have rediscovered it, and enjoy the veneer of legitimacy it provides.
Under this scheme, the loan shark agrees to buy something from you at a highly inflated price. This is often something like a watch or gold. This is purchased from you at a price equal to the loan you need. For instance, if you need S$10,000, the loan shark buys your watch for S$10,000, even if its worth a lot less.
However, you must sign a contract saying you agree to buy back the item from the loan shark at a much higher price later. In the above example, you might sign a contract agreeing to buy back the watch for S$15,000 in 18 months.
If you get rid of the all the window-dressing, like a contract or maybe the fact that the loan shark wears a tie, this is still just a loan. The sale to the loan shark is nothing more than you borrowing money, and your buy back is just repayment with high interest.
When you fail to make the requisite buyback, you will be harassed as badly as any other debtor. Dont be fooled into thinking youre dealing with a legitimate business.
Thoughts On Kiva Customers Dont Receive The Loans You Give
Im a fan of kiva, but Ive got to say, I think they go beyond sin of omission. You find a group you want to fund. Kiva tells you with a little red graph that the group needs say $700 and they have $620 in loans so far. You put in $20 and the graph says they have $640. Someone can put in $60 and close the gap. The graph will fill up and turn green. Kiva says the group wont be funded until the total amount is raised. Once it is, you can check in your Kiva account how the group is doing. You get an email each time the group pays back some money. Your Kiva account shows the percentage paid back with a graph below the picture of your group. Its hard not to think that your money is very specifically going to that particular group and being paid back by that particular group. This all seems a bit more proactive than an omission. None of this changes any of the rest of the points in your post. I understand if it is not possible to actually send your money to a particular group or person. It does seem however that kiva is moving into shaky territory in the specificity of their website. I mean, at what point do they cross the line into false advertising?
The post-9/11 vilification of the Red Cross brought all this to light. Kiva should have heeded those lessons. They wouldnt be in the headlines this way now.
Great post. I write a development blog for a younger audience and found your piece very informative. Many thanks, Clare.
Read Also: Using Va Loan For Investment Property
Loans That Would Be Eliminated
The Loan Shark Prevention Act would effectively outlaw payday loans. These are small, very short-term loans that do not require a credit check. To make this type of loan profitable, payday lenders charge extremely high interest rates about $15 for every $100 borrowed over a two-week period, according to the Federal Reserve. That works out to an annual percentage rate of more than 390%. With a federal interest rate cap of 15%, payday lenders simply wouldnt be able to stay in business.
The act would have the same effect on auto title loans. These work much like payday loans but with a twist: Instead of giving the lender access to their paychecks, borrowers offer up their cars as collateral. If they cant repay the loan on time, the lender seizes the car and sells it. Auto title loans come with the same high interest as payday loans, plus an array of additional fees.
How A Loan Shark Works
A loan shark can be a person within a personal or professional network offering to provide loans at high interest rates. They may be found in under-banked neighborhoods, on the internet, or through personal networks. Their funds are usually from unidentified sources, and they work for personal businesses or unregistered entities.
Loan sharks do not require background checks or credit reports. They will lend large sums of money with the intention of gaining high levels of interest in a short time. Loans from loan sharks charge interest rates far above any regulated rate. For example, a loan shark might lend $10,000 to a person with the provision that $20,000 be repaid within 30 days. These lenders may also often call on the debt to be repaid at any time, using violence as a means of forcing repayment.
In most cases business dealings with a loan shark are illegal it is best to seek other alternatives.
Read Also: Becu Autosmart
How Can I Turn My Va Payments Into A Large Lump Sum
How can i turn my VA payments into a large lump sum?
i get $1,228 a month from the VA as compensation for the wounds i received in combat in Iraq. I was hoping someone knows of a business like Peach Tree or JG Wentworth that will advance me $6k and allow me to sign my payments from the VA over to the lending company for a few months until the loan and interest are payed off. i tried peach tree and JG Wentworth but they said that they dont loan money against a VA compensation and that they work mostly with lotto and legall cominsation reciprocatests.
ANSWER: For Credit and finance solutions I recommend this site where you can find all the solutions. personalfinancesolutions.info
Which bank providing home loan for patta land Purchase?
Which bank providing home loan for patta land Purchase?
My credit score is 760. What type of mortgage rate will I get in Illinois for an interest only 5/1 year arm?
Is this everchanging real estate and mortgage lending market, its hard to tell what will happen next month. I am looking to purchase a home in Chicago in approximately 3 months. My credit score is 760. What type of interest rate will I get on a 5/1 interest only arm?”
Do you need a credit card to rent a movie from redbox or is it cash and credit?
Do you need a credit card to rent a movie from redbox or is it cash and credit?
Are there still loan sharks and if so how do I get ahold of one?
I need money now and I’m expecting a large check but not until December.
Services For The Developmentally Disabled
Ms. Catherine Fife: This petition is entitled Ontario Needs to Fund Family-Created Housing.
To the Legislative Assembly of Ontario:
Whereas the Ontario governments 2014 budget included a commitment to address the wait-list of more than 12,000 adults with developmental disabilities awaiting residential funding, and some of whom have been waiting more than 20 years and
Whereas since the spring of 2014 the number of adults with developmental disabilities awaiting residential funding has grown to more than 14,000 and
Whereas there is currently no available funding to plan for a respectful transition from the family home to a home of choice in the community and
Whereas more than 1,450 Ontario parents over the age of 70 continue to provide primary care to their adult child and
Whereas currently adults with developmental disability must go on the crisis list before they receive residential funding, often resulting in a loss of choice, dignity and community and
Whereas family-created housing prioritizes dignity, choice and community inclusion for the resident living with disability as well as providing long-term cost savings for the province
We, the undersigned, petition the Minister of Community and Social Services to address the growing wait-list for adults with developmental disabilities awaiting residential funding and provide stable funding opportunities for family-created housing.
Its my pleasure to affix my signature and give this to page Leah.
Also Check: Rv Loan Calculator Usaa
Pandemic Gives Loan Sharks More Prey
Business partners Noradhiah and Shahirah, who asked that their real names and the type of small business they own not be disclosed, sit nervously, fidgeting in their chairs, as the phone call gets underway.
They listen and watch as a case manager for the Muslim Consumer Association Malaysia talks with a loan sharks henchman.
The case manager tells the henchman that theyre going to negotiate a deal that will bring a close to all business between the loan shark and Noradhiah and Shahirah
The henchman says they owe the equivalent of nearly $1,000.
Their troubles started several months before, when they borrowed the equivalent of about $4,000 from someone they were tricked into thinking was a licensed money lender.
They said theyve since paid back more than double what they borrowed, and when they tried to stop paying, the henchman hinted at vandalizing their homes.
It has all taken a heavy toll on these women financially and psychologically.
Lost sleep, lost appetite, always worried and I even lost weight, Shahirah said.
The Muslim Consumer Association Malaysia, a nongovernment organization, said for the past year it has been getting about 25 new cases each day of loan shark victims asking for help. Thats a 30% increase compared with before the pandemic.
Its a situation of desperation. A situation of frustration, Nadzim Johan, the chairman of the Muslim Consumer Association Malaysia, said.
WATCH: Swimming with ‘sharks’
Advance Fee Loan Sharks
Dear New Yorker:
With the rapid development of technology, our society is moving closer and closer to a paperless economy. This makes personal credit even that much more important in our daily lives. Unfortunately, maintaining good credit can be difficult.
Worse yet, scam artists have found a way to reach out to those particularly vulnerable consumers, those with credit problems or no credit history at all, the unemployed, and even those consumers in emergencies who have an immediate need for cash.
The scams — Advance Fee Loans — usually “guarantee” or represent a “high likelihood of success” that they can arrange a loan or credit for a consumer, regardless of the consumer’s credit history.
The scams differ from legitimate credit offers in one important way — they require payments up-front, before the lender is identified and the application is completed.
Keep in mind, advance-fee loan scams are oftentimes advertised in recognized media outlets – your local paper, radio station or on cable TV spots. This, however, does not guarantee the legitimacy of the company or their offer.
If you have further questions about advance-fee loans or other credit offers, please contact our office at 771-7755 or visit our office’s website at ag.ny.gov.
Don’t pay for a promise. It’s illegal for companies doing business by phone to promise you a loan and ask you to pay for it before they deliver.
Recommended Reading: Usaa Used Car Interest Rates
Where To Go For Help
A spokeswoman for debt charity StepChange said: “The post-Covid landscape is, unfortunately, one that is ripe for exploitative and unscrupulous operators to take advantage of people in debt.
“But there are better ways of dealing with debt problems than resorting to illegal money lenders. Free, confidential advice from reputable organisations can help people avoid getting trapped in a spiral of ever more expensive borrowing.”
Reporting A Loan Shark
In England, you can also report them to the Stop Loan Sharks team by calling or on the Stop Loan Sharks website
In Northern Ireland, contact the Trading Standards Consumerline on or on the Stop Loan Sharks NI website
If youve been approached by someone you think is a loan shark, contact the police on 999 if youre in immediate danger.
Loan sharks will never stop chasing you for money, so its important you take action as soon as possible.
Anything you tell them will be treated in the strictest confidence and you can remain anonymous. The loan shark wont know theyre being investigated.
Find out how to report a loan shark on the GOV.UK website
You can also check if theyre a legal lender on the Loan Smart website
Recommended Reading: Prosper Loan Approval Time