Indeed, life can be tough. This is because much of it revolves around financial matters. It is very challenging to find a new job or even start a business. The tax rates are high and few employment opportunities make it difficult to earn a stable income. As such, many people resort to applying for personal loans whenever they needed money. This is true especially for making big purchases and paying off other debts. However, there are drawbacks to this. For example, it can include having to submit many requirements and it entails a long processing time.
As such, this makes personal loans from banks better. Some people opt for loan sharks who offer loans with a whopping 20% interest rates versus 1.4% bank rates. Despite these, some people are willing to take the financial risk and dive into a tank of shark lenders.
Defining Shark Loans
Loan sharks are an entity that offers loans to cash-strapped individuals. Oftentimes, they target a demographic that is unable to take the legal bank loans. The authorities limit the contract loans to have an interest rate of up to 6% only. However, loan sharks oftentimes charge the person beyond that limit. They sometimes ask for a 20% charge or more which must be paid in a short period. Their funds come in unidentified sources. They operate online or in low to mid-income neighborhoods.
Loan sharks would usually target individuals who need quick cash and are willing to pay it on short terms. If the borrower fails to pay it on time, the sharks might result even in violent means just to have their money back. Indeed, this system is highly marauding. It takes advantage of the demographic that is more likely to need money on short notice.
Reasons Why Loan Sharks are a Terrible Choice
Here are various things to consider before deciding to take the bait of the loan sharks. It is recommended that if you opt for a personal loan, take it from banks or other informal lending institutions.
If it is Too Good to Be True, Then It Might Be Illegal
Loan sharks only need one to two IDs then you can get your money in less than 24 hours. However, this means that you agree to the interest rates that are off the roof with limited time to pay back. Then, you will later find out that you can no longer contact or track them since loan sharks don’t have registered companies.
Loan Sharks Do Not Conduct Background Checks
Stringent background checking is one of the reasons why many low-income individuals refuse to apply for a personal loan from the banks. This is the same reason why they prefer to borrow from loan sharks. Despite the high interest, many customers opt for loan sharks due to the ease of applications. Oftentimes, people opt for loan sharks since they offer quick relief from their credit woes.
However, you must take note that the interest rates can accumulate quickly. If you cannot pay the debt back, then you are just pushing yourself to even a bigger financial hole. As you take a loan from the sharks, you will end up spending your life into a loop of debt.
As such, avoid illegal loans and high-interest rates altogether. Try applying for a personal loan from banks such as EasyFind.sg. Go for it and save yourself over 17% in interest.
Loan Sharks are Illegal
One form of exploitation is the bastardization of personal bank loans. This is an illegal business of lending money at high-interest rates. This can always favor the lender. If you need cash, remember that the loan sharks offer them at 20% interest rates. If you cannot pay it back, there is a possibility of intimidation. Loan sharks are prohibited and punishable by law. This is a red flag that should convince you to avoid it right away. You can never get a personal loan from a loan shark that involves an ethical process. Their goal is to collect money from those who are already in a bad financial status.
Personal Loans Will Allow you to Build a Good Credit History
Do you plan to open a business in the future? Do you wish to get other lines of credit for having a car or a house? If yes is your answer, getting a small loan or applying for a credit card and paying it off on time is your best bet. This will allow you the banks to check on your credit history. This is true whether or not you have a long list of delinquent payments from other banks.
If you have a good credit standing, the bank can approve your loan from 5 to 7 banking days. With this, it is good to start building a good credit score as early as possible. Remember that paying off personal loans from EasyCredit.com.sg is a good way to increase credit score.