Applying for loans can be a significant relief to address financial deficiencies or to expand a business. With more and more people leveraging on the power of loans, lenders after lenders are popping out like mushrooms. While most of these have proper backups, many are formed to deceive people and rake profit. These are scams. In the credit world, they are known as loan sharks.
Loan sharks may appear legitimate but in fact, are voracious entities preying on your innocence and hard-earned money. That is why it is essential to have a basic knowledge and understanding of the credit world. In that way, you can distinguish which lenders are loan sharks and which are legitimate. You may want to check out the best mortgage lenders in houston tx for the best legal options.
Anyways, here are some of the common characteristics of a loan shark. You need to watch out for these to save your money and put it to its intended use.
1. Offers extremely high-interest rate
At some point, we get frantic to receive loans right away so we can fund the next projects. Because of that, a lot would fall to the common deception of high-interest rate which loan sharks offer. Some prices can go as high as 100%. Because of the urgency, borrowers are typically pulled into the ease and practicality of the credit application process. The loan sharks often use ‘gatherers’ to make daily adjusts to gather the day by day reimbursement.
2. Considers ID or ATM as sufficient Collateral
For legitimate lending companies, properties are mostly recommended as collateral. But for loan sharks, an ID or ATM is enough to get things done quickly. Loan sharks don’t entail ownership as security as they will only ask for your ID or ATM card. Through this process, the loan sharks make use of a credit shark to consolidate the PIN and other private financial balance data of the lender. Other advance sharks may also prey on the borrower’s identification, driver’s permit, and different types of IDs.
3. Requires no formal loan contracts
Loan sharks don’t require formal loan contracts. They plan to make all transactions verbal as much as possible. This is in contrast with the practice of a legal lending institution which gives a printed copy of the agreement. The method is also one way of settling terms and conditions.
4. No Record of Payments
Loan sharks don’t provide a copy of their customer’s reimbursements as well as a composed credit understanding. Because of that, they could build an obligation since their victims may not be monitoring the amount despite everything they owe.
5. Entails an Advance Fee
Before you proceed with the loan processing, loan sharks will require you to deliver an advance payment. Of course, they will claim to discharge a guaranteed advance sum. Sadly, you can no longer get in touch with them after some time. Even worse, you could lose track of them, including the tons of money you entrusted.
With all that, it is imperative to always be vigilant at where you are putting on your resources. Select your lenders well. You can also consider consulting with credible agencies and institutions such as the best mortgage lenders in houston tx to help you decide on where to apply. In that way, you won’t fall to loan sharks.