You know how the old saying goes: if it is too good to be true it probably is.

Even though these words of wisdom are dancing around your head, it doesn’t mean you always listen to them. This is particularly true when it comes to financial decisions.

If you believe a loan is too good to be true, there is a very good chance it is. Not only that, but you could find yourself closer than ever to getting into a relationship with a loan shark. Is that a risk you want to take?

Here are three ways to tell if a loan is too good to be true:

1. You are not asked to complete much paperwork. Let’s face it: traditional lenders require that you fill out quite a bit of paperwork, while providing a variety of documentation. If this is not asked of you, something is wrong.
2. The lender is willing to give you as much money as you want. This should be a red flag, as most lenders will not hand over money just because you ask for it. You need to show that you are qualified. This is based largely on your financial standing, collateral, and credit score.
3. You cannot find any information on the lender. A basic online search should help you learn more about a lender, including expert and consumer reviews. If you cannot find any of these, something is wrong. The lender is not legitimate, but may instead be considered a loan shark.

When a loan is too good to be true, it’s best to step back and understand what is going on. You may soon find that a loan shark is targeting you. Moving forward is a mistake on many levels. There are enough legitimate lenders that you don’t have to go down this path.

There is a big difference between the ability to spot a loan shark and actually avoiding this type of “lender.”

Those who are unfamiliar with the pitfalls of loan shark borrowing often find themselves considering this arrangement. Acting on this could be one of the biggest financial mistakes you ever make, either from a personal or business perspective.

Here are some of the many pitfalls associated with loan shark borrowing:

1. High interest rate. Hands down, this is one of the first things you will recognize. Loan sharks don’t care what traditional lenders are doing. They set their rates extremely high, as this puts them in position to make as much money as possible.
2. Lack of organization. Loan sharks make it easy to get a loan. This is why so many people consider this alternative to traditional lending. The problem with this is that these so-called lenders don’t have the organization and structure necessary to lend money in the appropriate manner.
3. Danger, danger, danger. That is exactly what should be going through your head as you contemplate an agreement with a loan shark. It doesn’t matter what type of loan you are seeking, you should only consider a relationship with a reputable lender. Anything else is extremely dangerous, as loan sharks have a bad reputation for using scare tactics (or worse) to get what they want.

Borrowing from a loan shark is typically easier than securing a loan from a traditional bank. Of course, this comes at a cost. The pitfalls above should be more than enough to scare you away from this financial decision.

Can you think of any other reasons to avoid loan shark borrowing at all costs?

Do you find yourself seeking a reputable lender for a business loan? Are you ready to secure a loan, but unsure if you are making the right decision?

One of the most difficult decisions you will make is deciding which lender to do business with. This is especially true in today’s day and age, as you have many options to choose from.

If you have concerns about making a poor decision, if you are concerned you may end up borrowing from a loan shark, you are not alone. Fortunately, there are things you can do to avoid trouble.

Here are three ways to spot a loan shark in 2016:

• Lack of paperwork. Loan sharks don’t typically deal with all the paperwork and documentation of a traditional lender. If somebody offers you a loan but doesn’t request much or any information, something is wrong.
• High interest rate. Loan sharks make money by charging a high interest rate on all loans. They may make it easier to secure a loan, but you are definitely going to pay for it in the long run.
• Poor or no online reviews. In today’s day and age, the most reputable lenders have nothing to hide. There are plenty of online reviews detailing what they offer. With a loan shark, it is likely you won’t be able to find any information on them.

If you need a business loan but have concerns about making a sound decision, don’t rush into anything. You should only sign on the dotted line once you are 100 percent sure that the lender has your best interests in mind. This means one thing: you must avoid loan sharks at all costs.

As a business owner, you understand the importance of having a strong financial base. This means something different to everybody, with many realizing that access to a reputable lender would be in his or her best interest.

Over the years, predatory lending has become a growing problem. This has made it more difficult to not only find the right lender, but to trust somebody to provide you with a loan that suits your every need.

With the new year on its way, you may be thinking about borrowing money in the near future. Rather than make a rash decision that could come back to harm you, now is the time to better understand the process of finding a reputable lender. Here is what you should do:

1. Make a list of national and local lenders with a good reputation for its business lending practices. It may take some time to hunt down the appropriate information, but the internet has made this much easier.

You should also speak with people in your network who have borrowed money in the past. They can point you towards a loan officer who will have your best interests in mind from start to finish.

2. Prepare yourself for the process. Many people turn to a loan shark because of the work associated with borrowing from a traditional lender. Don’t let this happen to you.

Yes, there is paperwork involved with applying for a loan. While this may take some time, it will work in your favor over the long run. A loan shark may remove this pain from the process, but you will never come out on top in the end.

3. Be ready to say no. If for any reason a lender puts you off, don’t hesitate to say no and seek another opportunity. With so many lenders to choose from, there is no point in making a decision you will regret.

With this information guiding you, it is possible to find a reputable lender for your business in 2016.

Do you have any other advice to add?