What is a loan shark? 5 reasons to avoid this type of credit

What is a loan shark?

You've certainly heard about loan sharks, and in general, the subject comes up on two occasions.

Or someone suggests this alternative jokingly when the other is desperate for money.

Or, the subject is accompanied by news of some tragedy involving loan sharking.

In both cases, it is clear that the results of this option are not so positive.

But, to understand it well, it is important to explain in detail what a loan shark is.

When we talk about a loan shark, we are referring to a person who offers money loans outside of legal parameters.

This means that this is an illegal activity, and later we will see that it is also criminal.

The loan shark offers amounts under his own criteria and conditions.

So, do you know those rules and guarantees offered by the Central Bank for financial transactions and credit granting? With loan sharks, that doesn't exist!

This is because the activity is not regulated and does not comply with standards and laws.

Thus, the following items are at the loan shark's discretion:

Value offered;
Conditions for transferring the amount;
Possibility of installments;
Payment date;
Consequences in case of default.

The reason many people seek this alternative is precisely the ease of obtaining credit.

This is because loan sharks do not usually perform credit analysis, therefore, they offer the amount to whoever seeks it, based on their criteria.

But, as we have already mentioned, the risks of this operation are proportional to the credit facility it offers.

This is because all criteria and practices depend on the loan shark’s will.

Therefore, in case of problems, you will not have legal protection, and you may suffer blackmail, threats, and even serious risks for having been involved in something illegal.

These losses can range from having property taken, to more serious conditions involving violence and even death.

After knowing what a loan shark is: reasons to avoid it

After the explanation in the previous topic, you certainly understand why asking for money from a loan shark is not a good idea.

This is because, if in cases of loans with legal support and made under regulated conditions there may already be losses, with loan sharks this can get worse.

This is because you have nothing to offer you guarantees, and on top of that, it depends on the creditor's wishes and conditions.

What if he wants the money sooner? What if you can't pay? What's the maximum interest rate on the loan?

There is no answer to any of these questions, so it's pretty much a gamble.

But, as we have already said, many still insist on this option due to the ease of obtaining credit.

In general, the thinking is that the ease outweighs the risks, but is that true?

It is a fact that no one asks for a loan from a loan shark with the intention of not paying back, since the risks are known.

But a lot can happen, and that's when you can get into a lot of trouble.

Let's look at 5 reasons not to adhere to this proposal under any circumstances.

1. Very high interest rates

If you're going through a difficult financial situation and have wondered what a loan shark is, it's probably because you've been presented with this proposal.

This usually happens when you have already tried to get credit in every legal way but have not been successful.

This way, they guarantee you that with a loan shark this will not be a problem.

And, in fact, it usually isn't, since the loan shark lends money easily.

But everything would be wonderful if it weren't for one detail: the extremely high interest rates.

As we have already mentioned, a loan shark uses his own criteria to make loans.

Therefore, it does not comply with the maximum interest rates to be charged on transactions.

Therefore, there is no limit to the interest, he can charge you 10%, 20%, 50%, 100%, 500% and the truth is that the list is endless.

So, getting involved with a loan shark means running the risk of never being able to pay off your debt, thanks to the exorbitant interest rates.

2. Short term to pay

When taking out a loan, the first thing a bank manager asks you is how long you want to pay it back.

There are options that offer up to 4 years to pay off common loans.

With a loan shark, these rules do not exist, and the term is stipulated by the creditor's will.

So, he can lend you a large amount and ask for it back in a very short time.

We are referring to deadlines such as 2 weeks to return 5 thousand reais.

This situation is a real mess, since the chances of you being able to pay in such a short period of time are very low.

The result? Interest on top of interest, which ends up making the debt unpayable.

Therefore, as advantageous as it may seem to borrow money without a credit check, remember that time can be your enemy.

So, if you know what a loan shark is, you also know that exceeding the deadline is never a good idea!

3. What is a loan shark? It's a crime!

This reason should be the first, after all, after knowing what a loan shark is, it becomes clear that it is not something legalized.

However, it is worth highlighting that there is a law that prohibits and condemns this practice.

To be very specific, it is actually not just one law, but several, since the practice of loan sharking violates several Brazilian laws.

However, the most relevant law on the subject is Law No. 1521/51, in Article 4, which specifically addresses the practice of loan sharking.

Loan sharking is legally recognized as a crime of usury, and consists of granting loans without respecting the rules and determinations of interest and conditions.

This means that lending money without following the Central Bank's guidelines and without respecting the Consumer Protection Code is a crime.

But it is worth mentioning that the practice of loan sharking also constitutes crimes such as:

Extortion;
Threat;
Moral and material damages;
Fraud;
Between others.

So, by getting involved in loan sharking you will be committing several crimes.

4. If you can't pay, violence is usually the loan shark's solution.

Have you ever stopped to think that if the loan shark acts outside the law, he cannot use it to collect debts?

This is because, when owing money to a bank, it is protected by law, and therefore, it can take measures to collect and enforce the debt.

The loan shark, however, does not have this support, therefore, he needs to use his own resources to request (force!) payment.

In general, the measures used by loan sharks involve violence.

As a result, people who get involved with loan sharks constantly deal with:

Threats;
Blackmail;
Damaged goods;
Moral violence;
Physical violence;
Torture;
And even death.

These measures are usually taken with minimal payment delays, and become more severe as the debt grows.

Therefore, acquiring debts with a loan shark can become a real nightmare.

So, by knowing what a loan shark is, you also know the risks you run!

5. Risk to your family

It is not uncommon for people to ask loan sharks for money because they are in such a difficult situation that they no longer value their own lives.

In these cases, the thought tends to be “if I can’t pay, my life would be worthless.”

But, it is worth mentioning that many loan sharks also target the victim's family.

Therefore, by getting involved with a loan shark, you will also be putting your family at risk, in addition to your life.

So, it is very important to be careful, keep your head on straight and look for safe ways to get money.

This way, you can improve your financial situation without getting into even bigger problems.

Finally, now you know what a loan shark is and the reasons not to get involved with it!

By: Roberta updated ago 2 years back

What is a loan shark? 5 reasons to avoid this type of credit