Some Tips on How to Spot and Avoid Loan Sharks

Copyright (c) 2010 Suzy Vanstrusen

When in need of fast cash, many consumers are becoming desperate and choosing credit deals being offered by loan sharks.Why is this happening?

Well, people with poor credit history often find it hard to get approved for the loans and credit accounts they need. After all, lending firms and banks usually turn down the credit application of borrowers with less than perfect credit scores. So what these consumers do, out of desperation, is to seek financial assistance from lenders who may take advantage of them. These type of lenders are commonly called loan sharks.

Individuals who took credit deals from loan sharks often realize the foolishness of their decisions a little too late. They cannot seem to keep up with their credit charges as their debts often carry exorbitant rates of interest. Not only that. Should they fail to come up with sufficient funds to pay their credit obligations, they discover that most loan sharks employ questionable ways of collecting repayments. In order to get back the money you owed them, they usually harass and threaten their borrowers.

Let us say that you are in need of financial assistance and a bad credit loan seems to be your best option, how can you spot and avoid making a deal with loan sharks? You will find the answer to this question in the succeeding paragraphs of this short article.

Tips on Spotting Loan Sharks

1. Ask for the rate of interest. The first tip on spotting loan sharks is to ask about the rate of interest that a lender charges on his credit account. If you think that the interest rate is way beyond the prevailing rates offered in the poor credit loans of most banks and credit organizations, then turn down the offer and seek financial assistance elsewhere.

2. Investigate the license or accreditation of the lender. The next tip that you can employ on spotting loan sharks is to contact the nearest government agency that handles and regulates money lenders in your area. Ask if the lender that you intend to deal with holds on to a license or accreditation from the state or federal government. If it does, then accept the bad credit loan that it offers. Otherwise, look for a more credible and legitimate credit organization and file for the poor credit loan that it provides.

But suppose you already made a deal with a loan shark. What should you do then?

First and foremost, you need to contact the local agency that regulates the money lenders in your locality. Then report the transaction you have made with a loan shark. The federal or state agency will certainly help you deal with both the bad credit loan as well as the lender.

Also, you need to be informed that you are not required by the state law to repay the poor credit loan that you have taken from a loan shark. After all, loan sharks do not have licenses to operate and extend financing deals with credit consumers.

If a loan shark starts to harass or threaten you just to collect the money you owed them, you can contact the police and file a report. This way, you can avoid further harassment and threats from the loan shark, and you will feel more secured as you try to responsibly manage your finances.

In order to avoid making the mistake of closing deals with loan sharks, all you need to do is remember and employ the tips we have enumerated above!