Loan sharks are a type of loan instrument. They come in many flavors, but the basic concept is the same: Get someone to pay you money in exchange for a loan.
Like mortgage lenders, they require a down-payment as part of their offering. However, they offer loans at higher interest rates and with more restrictive terms.
Like banks, they require an applicant to be ready to take out the money and repay it on time. And like bank offers, you can have more than one loan shark on file.
Unlike banks, there is no uniformed lender that takes over when one shark starts running out of loans. He will close his doors if he cannot meet demand!
There are several types of loan sharks and how they operate.
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Document everything
Even if you don’t think you will need to show your credit card statement, you should at least keep records of your spending. This way, if a loan shark tries to overcharge you, they can use this information to determine your identity.
It’s also important to keep track of payments made in order for the bank or loan shark to process your debt.
Many online storage services and applications can handle these records for you, and many offer features such as tracking payments and displaying account balances.
If the only way for a bank or loan shark to process your debt is by receiving a payment from you, they will need a proof of payment from you. It’s important to keep this record of proof of payment in case they fail to do so with another payment arrangement.
Talk to your lender
Whether you have a credit score, or not, your credit score still matters. Your new lender can use it to figure out if you are a good candidate for the loans they offer.
If you have a bad credit score, then your new lender may be more inclined to lower the interest rate or reduce the loan term to make you a more attractive borrower. If you have a great credit score, then this bank may be more likely to approve you with a higher interest rate and longer loan term.
Both cases assume that you talk to your new bank and get their approval. If you did not get approval before because of certain attributes of your personal financial situation, than that is what can lead up to an approval gap.
Consider paying back part of the loan
A few hundred dollars may not seem like a lot to you, but it can be to the loan shark. We all have bills to pay, right?
For example, a large student loan may cost $200 dollars for processing and disbursement. That $200 dollar cost seems small compared to other expenses, but it really adds up over time.
A good chunk of all loans must be paid off in full by the end of your deal. If you fail to do this, your debt will continue to increase at an alarming rate which is never a desirable situation.
Consider paying part of the loan onto another source of income until you get your debt in check. You will feel much better about yourself and your ability to take care of yourself if you do this.
Seek legal advice
Even if you feel you have done everything possible to protect yourself, don’t forget to seek legal advice. Many cases of loan shark harassment are not reported due to fear of being labeled a troublemaker or victim-blamer.
Many law enforcement agencies now have online resources that can help you find a lawyer or contact a criminal defense attorney for representation. Even if the case does not go to court, having a lawyer present during prosecution will prevent charges from being dismissed or reduced and will enable you to obtain some relief on your own.
If the harassment has gone too far and there is no hope for forgiveness or relief, then it is time to seek out legal remedies. The most important part of this is finding reliable legal help. Most attorneys do not practice individually and on very small cases, but on applying what they know in court and in social situations, they should be able take care of their clients.
Know your rights
Whether you’re borrowing money, buying a property, or both, having a basic understanding of loan shark harassment can help you feel protected.
If you experience any of the following, you’re probably a loan shark harassment victim:
Being threatened with arrest or legal proceedings if you don’t meet up with your obligations
If you have questions about what property you own or any financial arrangements surrounding it, being told that’s confidential and will be handled privately is common.
What not to do include
When confronted with a loan shark, you do not want to make any concessions. If you need to speak with the loan shark about a client, you should be polite and show them compassion.
If the loan shark is being kind and helpful, then too bad! That is beautiful but it does not mean that you can stop dealing with it. You should be compassionate and try your best to help the person out, but if that doesn’t work out, then there are steps that you can take.
It is also important to know what signs that a person is using intimidation or harassment to force someone into repayment. These include: emotional abuse such as constant berating or ridicule, physical abuse such as hitting or bruising of the person being treated, and financial abuse such as taking advantage of someone’s situation by extorting money from them.
Do not ignore payments
Even if a loan shark has your credit score at the bottom of their list, it does not mean they will not take action against you if you don’t pay off your debts.
Many times, loan sharks will take steps to collect on your debt, including going to court and trying to garnish your wages. If a court attempts to garnish your wages, contact a wage theft lawyer as soon as possible to protect your rights.
If the shark doesn’t have your credit score, you may be at a higher risk for identity theft and fraud. At such times, it is important to make regular payments to keep the loan shark in business.
If a debt collector approaches you with offers of payment plan compliance or simply takes away their phone number, then you should probably consider letting them go because they are not the one who owe money.
Be honest with your lender
When you apply for a loan, your lender will usually try to make a good match between your income and the loan they offer.
If your income is higher than the limit on the loan, then you lose some of your down payment. In this case, your lender can help you find a different lender that can approve your application more quickly.
However, there are times when lenders cannot approve an applicant due to financial reasons. It is important to be honest with them about this fact so they can help figure out a way to get you approved faster.
It is very important to tell your story clearly and honestly when applying for a loan. If you are falling short of expectations due to career changes or other life changes, be honest with them about it.