A personal loan is the best tool to combat any unpredictable financial emergencies. However, sometimes lenders might reject your loan application , leaving you wondering where things went wrong. Well, it could be one of many reasons: a low credit score, unpaid debts, or missing documents.
Rejected and in urgent need of money, people end up going to a money lender to back them up, and that’s exactly when loan sharks lure individuals by offering them specifically what they need in their financial emergency. In this blog, you will learn exactly how to deal with loan sharks and explore some precautionary steps.
Loan sharks claim to provide an instant loan to individuals needing urgent money. Isn’t that supposed to be an effective financial solution to your financial crisis? Well, not really. Under the shadows of genuine instant loan providers, loan sharks are the ones who lend money at extremely high rates, which is often illegal and unethical.
People often become victims of these cunning loan sharks as they lure them during emergencies and have no option. If there is any failure to repay the debt, the lenders use violence and aggressively threaten to extort money. The unfortunate victims get stuck in a never-ending cycle of debt, forcing them to struggle with repayments that barely dent the original amount owed.
The common practices of a loan shark are mentioned below. If you ever encounter these, consider them a big red flag and take actionable measures to protect yourself.
In our country, a legitimate lender is always required to be licensed. Hence, financial authorities register and oversee the legal lender. On the contrary, loan sharks would lack the valid documents and approvals to operate as legitimate lenders.
A red flag that can be spotted from miles away is that loan sharks often use forceful methods to manipulate you to make quick decisions. In contrast, a legitimate lender would allow you time to think carefully and would work at your pace.
Overcharging is illegal and unethical in the first place, and to add to that, questionable and unimaginable interest rates are clear warning signs to detect loan sharks. These lenders impose unreasonable charges that often exceed the original amount borrowed, often touching the sky and surpassing legal edges.
A legitimate company would offer transparent documentation stating its terms and conditions, all the extra charges (if any), and repayment tenure. This is contrary to loan sharks, who deliberately dodge offering crucial information to serve their own interests and lure borrowers into agreements that often come with hidden costs and unexpected financial burdens.
Much like borrowers desperate for immediate funds, loan sharks are equally eager to offer quick loans. Loan sharks credit the money with minimal paperwork, hassle-free approvals, and little to no financial background checks. In contrast, traditional financial institutions would take time to verify the document and proceed further with the disbursal. Stay alert for these captivating, too-good-to-be-true scams.
Before proceeding with borrowing agreements with loan sharks, follow the below-mentioned safety precautionary measures to protect your financial well-being.
Research your lender wisely before providing any personal data. Use a platform like Quid that connects you with RBI-approved NBFCs. These lenders meet legal and ethical standards, ensuring safe and secure borrowing.
Borrowing from loan sharks carries significant risks, as they often impose interest rates far beyond legal limits. Hence, understanding legal lending rules and regulations can help you spot illegal practices and protect you from falling victim to these predatory schemes.
Give extra attention while reviewing all the contract details before approving any terms and conditions. A legitimate lender would give you a clear and transparent breakdown of all key information. Ensure you understand and know the possible interest rate, fees, and consequences of default in payment before you approve.
Considering the desperate situation, loan sharks would try manipulating you into quick decisions. Well, that’s a red flag! Stay alert and never fall into this trap. Take your own time to decide, and keep detailed records of all the communications and transactions, as it will help you if the lender tries to manipulate or deceive you in any way possible.
If you are struggling with debt or facing financial distress, don’t be hesitant to get help from financial advisors or counselors. They work for the betterment of us, ensuring no individual faces financial harm, leading them into pitfalls.
By practicing your legal rights, you can protect yourself from financial harm. Remember, any legitimate lender would never use violence or threaten you for repayment, and since loan sharks are illegal, they use unethical ways to extort money. So, if by any means you feel intimidated, be in touch with the legal authorities as soon as possible.
While loans from loan sharks might appear to be a quick and hassle-free solution to your financial emergency, they do have serious financial and personal consequences. Well, that’s exactly when loan aggregator platforms like Quid come to the rescue. It secures you a wide range of loan offerings by connecting you with RBI-approved NBFCs and financial institutions.
By understanding the dangers of loan sharks and taking the necessary safety precautions, you can protect yourself from lending scams and take hyperactive steps to credit responsibly.
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