7 Compelling Reasons to Avoid Loan Sharks

1. Exorbitant Interest Rates
   Loan sharks are notorious for charging outrageously high interest rates, often exceeding 100%. Their schemes prey on individuals in desperate financial situations, offering seemingly quick and easy loans. However, the catch is that these loans need to be repaid within a very short period. Borrowers might be lured by the convenience of the application process and the fact that they don’t need to visit the loan shark in person for daily payments. However, these loans come with severe costs, as loan sharks employ aggressive “collectors” who demand daily payments, regardless of the borrower’s financial situation.
2. Collateral in the Form of ID or ATM Card
   A common practice among loan sharks is to request personal collateral like an ID or ATM card—often referred to as “Sangla ATM.” Unlike legitimate lenders who require tangible assets, loan sharks exploit this loophole by demanding borrowers hand over their ATM cards along with their PIN and other sensitive banking information. This risky arrangement can lead to unauthorized withdrawals, identity theft, and various financial scams. In some cases, they may also demand other forms of ID, such as a driver’s license, which further jeopardizes the borrower’s personal security.
3. No Background Checks
   Unlike reputable financial institutions that perform thorough background checks to assess a borrower’s creditworthiness, loan sharks skip this crucial step. They may not verify your financial history or check your references. While legitimate lenders ensure they have sufficient information to guarantee the borrower’s ability to repay, loan sharks operate on a more exploitative model, relying on their ability to locate and harass you if necessary.
4. Absence of Formal Loan Contracts
   Transactions with loan sharks are often conducted verbally or with minimal documentation. Unlike legitimate lenders, who provide detailed written agreements outlining all the terms and conditions of the loan, loan sharks typically offer no formal contract. This lack of documentation leaves borrowers vulnerable to disputes over terms and makes it difficult to resolve issues or seek recourse.
5. No Record of Payments
   Another significant drawback of dealing with loan sharks is the absence of a payment record. Without a formal loan agreement or a record of payments, borrowers may struggle to keep track of how much they owe. This lack of transparency can result in escalating debt as borrowers may be unaware of the accumulating interest and additional charges.
6. Advance Fees
   Loan sharks often require borrowers to pay an advance fee before disbursing the promised loan amount. Once this fee is paid, borrowers frequently find themselves unable to contact the loan shark again. Since loan sharks are not regulated or registered, tracking them down or recovering the paid fee can be nearly impossible, leaving borrowers at a significant financial loss.
7. Threats and Harassment
   The most alarming aspect of borrowing from loan sharks is the potential for violence and harassment. If you fail to make timely payments, loan sharks may resort to intimidating tactics, threats, and even physical harm. They may target not only you but also your family, pressuring you into taking out additional loans to cover the debt. This vicious cycle can trap you in a relentless spiral of debt and distress, making it nearly impossible to escape their clutches.

In conclusion, the risks associated with loan sharks far outweigh any potential benefits. Their exploitative practices, lack of transparency, and potential for violence make them a dangerous choice for anyone in need of financial assistance. Always seek out reputable, regulated lenders who offer fair terms and provide clear documentation to ensure your financial safety and security.