Disadvantages of Taking A Loan From “Loan Shark”
Loan shark unlike a Licensed Moneylender Singapore is a money lender who is not given a formal license by the government. This person or a group of people prefer to grant loans to the people who have a bad credit history and are not eligible to apply for a bank loan.
Gamblers and compulsive shoppers are their major customers. The loans provided by these loan sharks carry a very high rate of interest. The biggest reason behind this is that these loans do not carry any tangible or intangible security along with them.
Many a times it can be a person from your friend circle or a relative itself. The main advantages of taking money from loan sharks are that they can provide you with loan amount in a very short period of time. There are no legal formalities undertaken as well.
Disadvantages of borrowing money from the Loan Sharks
- Lender Terms – The biggest drawback is that the loan is granted only on the lenders terms and conditions. Hey can grant you loan say within some hours or days but will charge sky high rate of interest. Many a times you might end up feeling that you are actually in a loss.
- Expensive and Complicated – While borrowing bank loans, the applicant has to go through a set procedure. The rate of interest will be charged annually. But in this case the lender can charge interest rates on weekly or monthly basis. At times the procedures get very complicated for the applicant.
- High Rate of Interest- The Loan Sharks charge a higher rate of interest on the amount of loan given to the applicant. And there is no legal authority to keep a check on this. The lenders generally charges on the weekly or monthly basis.
- No Reporting to Credit Excel Money Lender – Loan sharks do not need to report to the credit agencies because they are not bound by any legal agreement. If you amongst the money borrowers who have a bad credit history and want to improve your image then this Credit Excel Money Lender method is not made for you. They have no legal records and hence do not report to any authorities. This is the biggest advantage of dealing with loan sharks. You do get any platform to lodge your complaints.
- No specified working format – The loan sharks don’t have any protocol or specific working formats. Most of the loan sharks do not have required licenses and hence hey need to work illegally. There are no rules and regulation for their working. They deal with the most notorious people. He applicant doesn’t have any place to complaint in case of any problems.
These are the major disadvantages of borrowing money from the loan sharks. It is always recommended to deal with the licensed money lenders in order to have a legal backing with you. There is a set protocol which they follow and you are also assured about the entire process.