When you’re desperate for money, it’s tempting to take any loan. This is especially true if you have bad credit.
If this sounds familiar, take a pause. There are unscrupulous individuals lying in wait to take advantage of your predicament. You know them as loan sharks.
Loan sharks have been around for centuries. The only thing that’s changed is technology. Despite rules and regulations, loan sharks are still breaking the law and they’re using technology to do it.
Sharks are slick. Stay one step ahead with these tips for spotting a loan shark.
Online Money Lenders
If there’s a will, there’s a way. How much interest are you willing to pay for an instant loan? Loan sharks are betting that you’re desperate enough to take the money and ignore the 500% interest rate.
Exorbitant interest rates are the first sign of a loan shark online. While bad credit is considered high risk, it still doesn’t justify such high-interest rates. Some rates go as high as 700% or more!
If you’re thinking this sounds a lot like payday lending, you’re right. Of course, no one is going to do business with a lender who markets themselves as a loan shark.
Payday lending is a playground for loan sharks. They hide behind slick online storefronts and fintech. Now, they brand themselves as online financial institutions or apps.
While many payday lenders could be characterized as loan sharks, there are community-based payday lending services at affordable rates.
Not all money lending is bad. If you decide to go that route, consider all your alternatives.
Title Loans
Another loan with high interest is title loans. These definitely give off that loan shark vibe.
These loans come with extremely high interest rates and fees. You could also lose your car in the process.
This is how title loans work: borrowers receive a loan in exchange for their car title. Sounds simple, right?
This is where things get complicated. After you hand over your title, some companies install a tracking device to keeps tabs on your car. This makes it easier to repossess your car if you can’t pay back your loan.
This hassle doesn’t even include the hidden fees these companies slip into your contract. Like payday loans, expect to pay interest rates of 300% or higher. You may also be pressured to buy additional service plans.
How to Spot Ads for Loan Sharks
You know the different ways loan sharks disguise themselves as legitimate institutions. You can also spare yourself a nightmare by understanding their language.
Be wary of lenders that sounds too good to be true. If you can get all the money you need in 24 hours with bad credit, there’s a catch. Some lenders advertise loans for as quick as 15 minutes!
Watch out for sales-heavy language. If an ad sounds like a bad used car salesman, that’s another red flag. A lot of these sharks can be found on Craigslist.
Buyer Beware
Getting tangled up with a loan shark is a recipe for financial disaster. Spare yourself the agony and remember these tips when you’re desperate for cash.
Financial freedom starts with recognizing and avoiding loan sharks. Continue on the right path with the latest tips for saving, growing, and borrowing money.
