In the course of a life there can be a financial shortage for different reasons and then it is quite normal to borrow money. If this can not be resolved promptly, there is a risk of over-indebtedness in the medium and long term. Many sufferers try to bridge the financial emergency with a loan. However, banks usually only lend to people with good credit ratings. Existing debts can reduce the creditworthiness and lead to a credit cancellation. Out of desperation, some sufferers – supposedly – seek help from a loan shark. Who or what a loan shark is and why it is dangerous to use its services, explains this guidebook article.
What is a loan shark?
A loan shark is the colloquial term for a dubious credit intermediary or lender. He works outside the state supervision of the financial market and thus offers his services illegally. The term loan shark indicates certain characteristics that are said to be sharks and that also apply to dubious lenders. This includes, for example, greed or aggressiveness or violence.
How do you recognize a loan shark?
A loan shark can be identified by certain characteristics. Signs of dubious business practices by lenders or intermediaries are:
- market-screaming Internet appearance
- Contact only via paid telephone numbers
- Information material only for a fee or by the (paid) visit of a representative
- Lending to customers with bad credit ratings
- Lending without additional collateral in almost unlimited amount
very high (sometimes even immoral) interest
- illegal methods of recovering due installments, including threats of violence
Reputable providers have a license from the German Federal Financial Supervisory Authority (BaFin). This entitles them to lend or broker commercial loans. Loan sharks do not have such a license. Consumers can check on the website of the BaFin itself whether a credit provider has the appropriate permission.
Why are loan sharks dangerous?
Loan sharks work outside government-supervised finance. This bypasses the conditions of the Federal Financial Supervisory Authority. This means that their activities are not subject to any controls and borrowers can not rely on existing consumer protection.
The business behavior of a credit shark often leads to the fact that the original financial situation does not change. Rather, it often gets worse as the debtor has to pay high upfront costs, management fees, commissions, overdrawn interest, and other costs. They are already “eliminating” part of the loan amount, so that they end up with additional financing needs to pay for the new debt. Some loan sharks require the conclusion of life or other insurance as collateral.
In addition, the dubious brokers offer not only the so-called Bank-free loan but also assistance in debt settlement and financial rehabilitation. For example, talks with the creditors. These additional services are usually expensive to pay for – regardless of whether they succeed with their support or not. Often, the dubious providers do not provide this performance in the first place.
The result: the borrower has to pay even more bills, can not meet the payment obligations soon and he gets even deeper into the debt trap. In order to receive their repayments, loan sharks often use questionable methods that may include the threat of violence.
What reasons do you have to go to a loan shark?
Due to a long illness someone has lost his job, the rate for the house is hard to pay and then the car is still on strike. Many scenarios are conceivable that make people seek a loan shark. Most sufferers know that these are dubious and illegally working persons. But with many debtors, the despair is so great that they feel compelled to take advantage of the “help” of a credit shark. That is exactly what the dubious credit intermediaries and lenders take advantage of. They advertise, loans also “without Bank” to convey or forgive. In doing so, they are tailoring their offer to those with low credit ratings who would not stand a chance of getting a loan from a bank.
Why should one renounce a loan shark?
Even if at first glance there seems to be no other way out of financial hardship, people should never use the services of a credit shark. This is the consensual and urgent warning from financial experts and consumer advocates.
You name several reasons for this:
- The most important and usually only goal of loan sharks is to maximize their profits.
- They offer little or no service.
- They demand disproportionately high interest rates.
- Often, high commissions or other costs have to be paid.
- The risk of over-indebtedness / of a debt cycle increases considerably.
- Default in payment threatens massive repayment claims, sometimes even under threat of force.
Bank is the safe alternative to the loan shark
Loan sharks or dubious providers of overpriced loans that take advantage of people’s Bank problems are unfortunately often searched and found online. Anyone who needs money only once to bridge a short-term financial bottleneck – be it for a car repair, the financing of the first own car, a new dishwasher or a small renovation in the house and apartment – must not run the risk of falling into the debt trap , Exactly for these cases we offer you the Bank on-line credit with all relevant information for you. We not only check your credit rating exactly, but assess it for the short duration of your loan. Thus, even customers with a medium Bank score can “get the opportunity” to take out a short-term loan with favorable interest rates.
We work together with the net-m Bank and can thus offer a reputable service, which has awarded him the test winner of the “BankingCheck Award” for short-term credit. In addition, the more often you use our service and pay back on time, the higher the next Bank short-term credit. By timely repayment of your loan, you increase our confidence in your repayment reliability. Benefit from our reputable service and calculate without obligation and free of charge your desired loan with our loan calculator.
Why is not it possible without Bank?
We also rely on the findings of Bank when granting loans, which is important for us and you! This is the only way we can effectively protect our customers from over-indebtedness through new loans and loans. If you want to learn more about debt traps and how to learn how to deal with money, you should read the blog post here.