If you find yourself in need of a loan, regardless of the reason, there will be a lot on your mind. However, you have to ensure yourself of one thing: that you are doing business with a reputable lender.
The last thing you want to do is find yourself involved with a loan shark. These people or “companies” prey on borrowers who are in need of quick cash. They have no problem giving you the money you need, but it will come at a cost. Not only will you be charged a high rate of interest, but you could soon find yourself a victim of threats and even violence.
Now are you beginning to see why you should avoid this type of lender?
Ask these Questions
Those who are uninformed and unsure of how to spot a loan shark may not realize that they are about to make a bad decision. Fortunately, you can separate loan sharks from reputable lenders by asking the following questions:
Can you provide me with documentation related to the loan?
Most loan sharks don’t care about paperwork, applications, or any sort of documentation. Instead, all they want is to loan you money and charge you a high rate of interest.
Reputable lenders will require you to go through an application process. Additionally, they will provide you details of your loan, such as the term and interest rate, before you sign on the dotted line.
If a lender doesn’t believe in paperwork you are dealing with a loan shark.
What is the interest rate associated with my loan?
Obviously, this is one of the most important questions you need to ask regardless of the lender you are speaking with. If you don’t know the interest rate how do you know you are getting the best loan for your financial situation?
Loan sharks don’t like to supply borrowers with this information. There are two reasons for this:
- The rate will be so high that it is likely to scare the borrower away
- These lenders make it a habit of increasing the rate from time to time as a means of earning more money
What is my monthly payment and when will the loan be paid off for good?
A loan shark will dance around this question, trying their best to confuse you. One of the primary reasons for this is that they often times increase the amount of debt that is owed without your permission. Doesn’t sound fair, does it?
When you use common sense, you should not have any problem spotting a loan shark from a mile away. To make sure you are on the right track and not borrowing from a predatory lender, ask the three questions above.