How To Avoid Loan Sharks

How to​ Avoid Loan Sharks
If you​ have bad credit and are desperate for a​ loan,​ don't make the​ mistake of​ using a​ loan shark .​
Although many people think loan sharks are a​ fantasy from Hollywood movies,​ there are many lenders out there that will rip you​ off and act as​ a​ loan shark .​
If you​ want to​ get yourself a​ loan but are not sure how to​ avoid these bad lenders,​ then here is​ some advice on​ how to​ avoid loan sharks
What is​ a​ loan shark?
In essence,​ a​ loan shark is​ a​ lender who targets people with bad credit and difficult financial circumstances and offers them loans are extremely high rates .​
By preying on​ people who think they cannot get a​ loan elsewhere,​ the​ lender makes large sums of​ money through the​ high interest rates .​
Contracts are usually very unfair and there are harsh penalties if​ the​ borrower defaults or​ misses payment .​
These so called loan sharks use a​ variety of​ techniques to​ make money off people unfairly.
Large loan fees
Loan sharks often charge large fees in​ addition to​ the​ interest,​ which are added to​ the​ total cost of​ the​ loan .​
The borrower is​ often not told in​ detail about these charges,​ and may not notice that they are paying a​ lot more money for no reason at​ all .​
These fees on​ predatory loans can be as​ much as​ 5% of​ the​ total loan amount .​
Another type of​ fee often charged is​ for early payment on​ the​ loan .​
a​ lot of​ good loans do not carry these penalties,​ but loan sharks can charge up to​ 6 months' interest for early repayment.
High interest rates
The loan sharks target people who find it​ hard to​ get loans,​ and so for the​ ‘convenience' of​ allowing them a​ loan they charge huge interest rates .​
These rates could be 3 or​ 4 times more than you​ might normally pay,​ and even if​ you​ have bad credit there is​ no need to​ pay this much .​
If you​ look around then you​ will see that there are competitively priced loans even for people with a​ poor credit history.
Letting you​ borrow too much
Loan sharks are not really bothered about your ability to​ pay a​ loan back,​ because they usually make contracts unfair and require security so that if​ you​ do not pay back,​ you​ will lose your home .​
That is​ why these lenders will let you​ borrow more than you​ can really afford .​
They are making so much from the​ fees and interest that if​ you​ default and they repossess your property they will still make money.
Avoiding loan sharks
These loan sharks target people who think they cannot get a​ loan another way .​
However,​ even people with poor credit can get a​ legitimate loan with decent rates and no hidden charges .​
To avoid being the​ victim of​ a​ loan shark,​ only use reputable companies when getting a​ loan,​ and always check the​ contract you​ are signing in​ detail .​
If you​ are unsure about a​ loan or​ lending company,​ then contact an​ independent financial advisor .​
If you​ shop around and remain aware of​ the​ dangers,​ you​ won't become another victim of​ loan sharks and their predatory loans.

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