Some Tips on How to Spot and Avoid Loan Sharks

Most people who are in desperate need of credit usually resort to borrowing money from loan sharks. The reason behind this is the fact that most of these people have poor credit history, which may be caused by missed or late repayments on their previous debts. As most lending institutions will not extend loans and credit lines to people with bad credit, some may seek assistance lenders who may take advantage of them. These lenders are known as loan sharks.

But, soon, these individuals will realize the big mistake they have just committed; aside from the exorbitant interest rates that these lenders charge on the money they loan to people, they also employ questionable ways of collecting repayments by means of threats, harassment, and even violence. So if you are an individual seeking for a poor credit loan, how can you spot and avoid borrowing money from loan sharks? This article will give you two important tips to do just so.

The first tip in spotting loan sharks is to ask about the interest rates they impose on the money they lend to their borrowers. If you think that the interest rate is way beyond the prevailing rates charged by banks and credit firms in their bad credit loans, then, decline the offer and seek out the assistance only of credible lending institutions that offer poor credit loans.

The next tip is for you is to call the nearest government agency that handles and regulates money lenders within your area and inquire whether or not the lenders that you have talked to have license to operate. This is vital since by doing this, you could verify whether or not the lenders are registered with the government agency and that they operate in accordance with the rules and current rates of interest on the bad credit loans they provide. If they do not have licenses, then shy away from borrowing money from them to avoid paying large interest.

But, what if you have already borrowed money from a loan shark? What should you do?

The first thing you should do is to contact the local agency tasked to regulate money lenders and report the transaction you have made with a loan shark. This government agency will surely help you in dealing with both the loan and the lender. Also, you need to be informed that you are never obligated to repay a bad credit loan to illegal lenders. After all, loan sharks do not have licenses to operate and extend credit to people. If a lender harasses you into paying the money you have borrowed contact the police and report the lender to ensure that he or she will no longer threaten or harass you again.

Use these tips, and for sure you will avoid dealing with loan sharks!

 

About the Author:

Suzy Vanstrusen is a credit analyst and a writer on the website EZCreditRepairSolutions.com. She has been providing consumers with tips and wise information about credit repair as well as helping you out more with your bad credit loans.  Copyright © 2010
 

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