When you’re in desperate need of money, such as to repair your home or car, it’s common to consider all lending options available to you. And for many individuals, this means coming to terms with a loan shark.
Predatory lending isn’t something you want to get involved with. Even if it seems like your only option upfront, it won’t be long before you regret your decision to go down this path. Here are three reasons why this is a bad idea:
- High cost of borrowing: One of the primary drawbacks of a loan share is the high cost of borrowing that results from higher than average interest rates. Since they’re not regulated by the government, unlike traditional lenders, they can get away with this.
- Unclear terms and conditions: Loan sharks make it difficult for you to understand what you’re getting into. And when that happens, it’s possible that you could agree to a loan that’s not in your best interest.
- Potential for harassment: This never crosses your mind when borrowing from a traditional financial institution. Even if you default on your loan, you’ll never feel like you’re being harassed. Loan sharks, on the other hand, could take things too far. Should that happen, you may begin to feel like your personal well-being is at risk.
These are just a few of the many reasons why dealing with a loan shark is a bad idea. If you’re thinking about this kind of borrowing, take a step back and look into other options such as a personal loan, credit card cash advance, or a loan from a family member.
Even when money is tight and there doesn’t appear to be another option, getting involved with a predatory lender isn’t likely to help. You’ll end up in a worse spot in the long run.