When people are unable to get loans from the banks, they opt for loan sharks, especially if they have bad credit histories. In fact, when an individual is completely drowned in debts, but he needs some more money to get rid of his troubles, he does not even go to the banks. He goes to those creditors that give loan sharks to people. Even if he has to pay higher interests to the creditors for the money he gets, he agrees because in the end he is left with no option at all.
No matter how many people opt for the concept of loan sharks, they all know that it is an illegal activity. People go to such creditors because they know that there’s absolutely no one else to help them with money. There are times when even the friends give up on you and you are left with nothing in your hands except for agreeing with whatever terms and conditions the creditor keeps. For an instance, if your partner is admitted to the hospital and you have been told to deposit some money to operate some urgent problem that he has been diagnosed with, what will you do? Can you wait for the bank to give you money?
Following are the top four reasons why loan shark is an illegal activity
1.) The creditors are not licensed
Loan shark is an illegal activity because the creditors are not licensed. If you talk about banks and other such money lenders, you notice that they all are legally allowed to give money to those who request for loans. On the other hand, if you go to loan sharks, you see no certificate hung on the wall to prove that they are legal and allowed to give money.
2.) You may be threatened or blackmailed later
If you are unable to pay interest to the bank, you are warned legally. However, if you are unable to pay to loan sharks, you are not only warned violently, but also brutally beaten and blackmailed. Some people even reported about their missing loved ones who were kidnapped because they could not repay the loan amounts in time. No matter how much time you take, the bank at least does not kidnap your loved one or beats you violently to get the money back from you.
3.) The interest rate is too high
Government sets the loan interest rates for the banks and other legalized money lending institutions. However, when it comes to the loan sharks, nobody tells them what the interest rate is and how much they are supposed to charge. They make their own rules and regulations and thus take more than required from the debtor’s end.
4.) Game of the goons
Most of the goons are said to be into the concept of loan sharks and hence you risk your life is you take money from them.