Loans: Beware Of Sharks

This year money is the hot topic or the lack of it with many factors of everyday life now costing much more than they used to from food to fuel it’s all making it tougher on the average wage earner. The recent announcements of two major UK brands Woolworths and MFI having massive layoffs and other areas also having to cut jobs means that it could become very problematic for many families next year.

It’s becoming tougher to get any form of help also with loans and mortgages being refused as a result of the many problems with banks globally. Mortgages that many people were being solicited with are no longer and even home loans with percentages like 80% and 90% are now a rarity and the interest rates remain high even now as the market has been buoyed by government loans.

These government loans have come from a £500 million reserve set aside for low income families to gain an emergency loan but even this is tough to get approved for. A third of these loan applications have been refused and considering the growing number of people requiring to apply for these it means many will suffer if the bailout money remains hard to reach.

The problems may be multiplied if loan sharks get their way; loan sharks are ever ready to pounce on the needy with the tempting offer of a loan where normally a bank would have refused them. Whilst it may seem a godsend to those who take the sharks up on their offers very quickly people will realise how much trouble they’ve opened themselves sup to.

Loan sharks will often allow you to repay in small amounts but the amount of time you are paying back means that typically you will pay extortionate interest rates. These rates will often be hidden away whereas some people may moan and complain about 5 or 6% from the banks loans it is a completely different story to the shark’s rates of which sometimes can reach 8000%!

This was the case with a recently convicted shark who had charged his supposed customers 8000% as annual interest and whilst this is a severely extreme case there are still plenty of loan sharks around trying to get away with interest rates of around 200% of your initial loan.

The important advice is to never go for a loan shark’s money, it may be reassuring to know you’ve been approved but they will approve almost anyone and will take all of your money that you don’t have to give. If you fail to meet payments many sharks will threaten violence to coerce you to pay which may mean taking out another loan to cover that debt.

To avoid this dangerous cycle it’s recommended that you try alternatives like getting personal loans may be tougher as opposed to secured loans where by securing your loan against an asset is less of a risk for banks. It’s still important to check with multiple lenders and not to borrow what you don’t feel comfortable you’ll be able to pay back

By: Andy Adams

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While this article may have painted loans in a poor light there are plenty of secured loans providers who are still able to provide loans for when you need help raising funds for a bit of home improvement or other needs which personal loans may not cover.