Loan sharks: what they are, and how they operate
At this moment in time, there are numerous strategies that you can use in order to get access to a loan. There may however be cases when you are in need of a large loan, yet your credit score isn’t high enough to make you eligible to get a loan from a legal provider, such as bank, or loan agency. This represents the main reason why some people may choose loan sharks.
For those who do not know, loan sharks represent either individuals or companies who offer loans at incredibly high prices. The term is sometimes also used to refer to those who carry out illegal lending activities, and are not legally represented as a company or individual offering loans, according to the laws in your jurisdiction. From a historical standpoint, it is worth mentioning that loan sharks have been known to tend to enforce repayment of the funds being offered through strategies, such as blackmail and even acts of violence. In history, loan sharks have been put somewhere at the edge of legality, as long as they do not use acts of violence, in order to enforce repayment of the money being borrowed.
The history of shark loans
Back in the 19th century, in the United States, the existence of low legal interest rates made small loans extremely unprofitable for banks and other financial institutions. This represents the main reason why shark loans appeared on the market, as they offered illegal loans of just about any sum, yet implemented considerably higher interest fees which were not legal. This made the lending contracts null, therefore the shark loans did not have any possibility to claim the funds back in court, thus the reason why they chose violence and blackmail, in order to pursue clients to hand their money back, alongside with their interest fees.
Additionally, shark loans were also very popular in the mafia, and for offering loans meant to be used for illegal activities. To put things better into perspective, on the black market, it is often quite difficult for an individual to get an actual, legal loan, considering the fact that many of their assets may be illegally-owned, whereas their credit score may also be fairly bad. Additionally, from time to time, banks also tend to ask customers what they plan on using their money on, hence another reason while those involved with illegal activities found, and continue to find it difficult to score actual legal loans. In the 19th and 20th century, where gangs and criminality in general were soaring, loan sharks found a great opportunity to make some extra money. The interest rates being charged were extremely high, whereas the terms of the loan, such as the payback time, were also suited to offer a great advantage to the lender, and a big disadvantage to the borrower.
Loan sharks were present throughout the world, but most accounts come from the United States, the United Kingdom, Ireland, Italy and a few more regions.
Loan sharks today
At this moment in time, loan sharks generally operate in a legally grey area, so while their activity is not completely illegal, they are under to continuous supervision of legal entities, hence the acts of violence have greatly been reduced. Regardless of this aspect, most of the times, it is recommended that those who are in need of emergency funds do not choose loan sharks without a good history behind them, but rather payday loans for emergency funds, and actual personal loans in case more money is needed for a longer period of time. While credit may definitely be an issue for some, there are numerous strategies that can be implemented to increase your credit score, and some of these, may only take a few months to fulfil. You are also in advantage in case you have a multitude of assets that you can sign as collateral when contracting a larger loan, which is equally great news even for those who don’t have excellent credit, yet are in need of a larger sum of money.
Based on everything that has been outlined so far, long ago, loan sharks were efficient, yet extremely difficult. Today, they are still around, yet their operations aren’t illegal anymore. If you do end up needing the services of a loan shark, make sure to choose a professional with positive reviews, and always be careful to not risk more than you can afford to lose. There are always other ways of getting access to money, without spending way too much on the interest rates, or risking your assets and properties.