How to identify a loan shark from a responsible lender

Loan sharks are becoming more and more deceptive and can target vulnerable people who are in desperate need of a cash injection and have bad credit ratings.

However, it’s crucial that you don’t fall into the trap of using a loan shark as the consequences can be devastating. Loan sharking is illegal and many of the people associated with such practices have been known to resort to physical violence if you don’t pay back their money which can rise and rise at a rapid rate thanks to outrageous interest rates.

This article will highlight some of the key points to make yourself aware of and keep you away from loan sharks who can be dangerous people.

The first contact

The initial contact with a potential loan shark is likely to come out of the blue – usually with an email or letter. Remember, loan sharks can often present themselves as professional individuals or companies so don’t be fooled by fancy cooperate headed paper with business logos. Loan sharks identify potential victims by using public records – specifically targeting those in financial troubles.

Remember, legitimate and responsible lenders won’t come looking for you – they will rely on you to seek out them. Here is one of the clear differences between loan sharks and genuine loan companies offering a legal service.

Research the lender

As mentioned previously, loan sharks can disguise themselves as legitimate lenders in order to gain your trust. However, it’s vital to do your research on the company or individual to check whether the proposals are genuine. An effective way of finding such information is to check the Better Business Bureau (available online) which will tell you whether they have records of the organisation in question. Using a search engine to research should also give you a greater picture on the legality of the lenders.

Contact information

Loan sharks can setup fake websites that seem genuine on first glance – don’t be drawn in by a fancy design and professional-looking product. Checking if the website has contact information such as a physical address, email and telephone number can often be a telltale sign of whether the company is fraudulent or not. If there is contact information, make sure to get in touch and see how quickly you get a response.

Be direct

Make sure to quiz your potential lender extensively about the loan. Those who are hiding something about the legitimacy of their business will be vague and try to avoid difficult questions. If you’re not getting straight answers from your questions then you should be alarmed.