Credit shark or Loan shark is a person or organization that offers loans at extremely high interest rates, has strict repayment terms in case of non-repayment of the loan and usually acts outside the law (criminal or semi-criminal). The very process of lending and borrowing is usually illegal; there is a so-called “predatory lending” with extremely high interest rates, often with collateral for the results of labor or property that can be taken away as payment of debt.
What are loan sharks?
There are also schemes where credit shark organizations in the framework of international initiatives to combat poverty in the world take loans from official microfinance lenders at low interest rates and provide loans to poor borrowers who are unable to obtain these official loans – but at very high interest rates. “Loan sharks” sometimes force to pay off debts by blackmail or threats of violence.
Historically, many moneylenders are loan sharks and operate on the border between legally permitted and criminal activities. In many countries, “credit sharks” are part of organized crime and mafia structures.
It is important to remember that no one gives unsecured loans now. Individual lenders are ready to lend money secured by property up to only 30% of its appraised value. If the borrower can provide land, an expensive car or an apartment in a “new building” as collateral, there will be no problems with finding moneylenders – almost everyone will agree.
How to enter into a loan agreement with loan sharks?
After reaching an agreement, the parties enter into two agreements: a loan, as well as collateral or purchase and sale of property. As fraudulent schemes cannot be counted, it is necessary to consult a lawyer before signing the documents. There are often situations when even in the case of returning the money to the unfair lender, the borrower did not get back his car.
If the pledge is an apartment or a house, the moneylenders often demand that all registered tenants be discharged immediately, after which either a pledge agreement or a sale and purchase agreement is drawn up for the real estate. According to the second, the lender provides a deposit equal to the loan amount. And if the debtor does not return this amount and interest after the agreed term (under the contract penaltiesare declared), he will be obliged to re-register the apartment to a moneylender.
It is recommended to go to a meeting with the loan shark not alone, in order to have a reliable witness about the deal. And before you sign anything, you need to at least see the passport of a person who offers to borrow such a considerable amount, and even cash. The fact is that the usurer may be married, and then the amount of the loan falls within the scope of disposal of the joint property of the spouses. But the consent of the second half of the loan is required! Otherwise, the contract may be declared initially invalid, with the application of bilateral restitution (in short: the debtor may be required to return the money ahead of time and in full).
Formal registration of a loan from a loan shark
To properly formalize the relationship with the individual lender, ie loan shark, you must:
- Check the lender’s passport and require written consent to enter into a loan agreement with his / her spouse.
- When concluding a loan agreement, state that the loan shark confirms his right to dispose of the borrowed funds independently and that he has not withheld any information about these funds that may directly or indirectly affect the parties’ compliance with the terms of the agreement and invalidate it.
- When making a pledge, it is necessary to involve a lawyer to make sure that the property does not “fly away” in an unknown direction.
- Clearly prescribe the conditions and terms of repayment.
- Specify the nature of the contract: interest or interest-free, as well as the loan fee and the amount of penalties.
- When returning the money, it is necessary to write an act or receipt that confirms the fact of the refund in full and the parties have no claims against each other.
Be aware of all the risks when contacting loan sharks. If you have a choice, better choose lending companies for a quick financial help.