What is a Loan Shark? This is a term that not many people have ever heard, and few have ever had a good experience with one.
In the Philippines, many people do not know the dangers of a loan shark. This is why they always run to them, and when they do not get their desired money, they end up on the other end of the spectrum, cursing them.
This blog will focus on why you need to avoid a loan shark in the Philippines.
Loan Shark – Figure out what it means!
Table of Contents
What is a Loan Shark?
People have known loan sharks as unofficial lenders whose practices are very similar to those of a predatory lender. They lend money at remarkably high rates and expect it to be paid back immediately. They give immoral terms and use threatening tactics when collecting debts they think they’re owed.
Sangla ATM and 5-6 loan sharks are known as two shark loans in the Philippines. Both are unlicensed companies or individuals lending shady short-term loans with very high-interest rates, which can be approximately 20% or over 20% depending on the borrowers’ amount of money.
5-6 loan sharks use their position as private lenders to charge high-interest rates for loans that are sometimes under the table, whereas Sangla ATM operates like a bank that lends money using salary accounts as collateral.
What is the Unlicensed Lending Process in the Philippines?
Because as opposed to lending platforms, Sangla ATM and 5-6 loan sharks have not enrolled in the SEC (Securities and Exchange Commission). Almost all lending conditions and terms in these unofficial lenders are the same. The following terms are some typical ones of those.
Renting from a loan shark can be dangerous!
Unreasonable Interest Rates
The victims of loan sharks can be charged extremely unreasonable interest rates which exceed 100%. Moreover, they need to pay for those loans in a very short time.
Article III Section 20 of the 1987 Charter or the Bill of Rights states that “no person shall be sent to the jail for debt, except in cases of insolvency.” However, suppose all terms or provisions of any loan agreement that both parties sign are made fully-in writing and agreed upon then and there.
In that case, the lender still asks the borrowers to repay all borrowed amounts before being freed from an obligation to do so.
What is a loan shark, and what do you need to know?
ID or ATM Card Requirement as Collateral
Illegitimate money lenders may require borrowers to share confidential information about their credit cards accounts, such as the PIN and bank account number.
Many also demand that borrowers give them their identification documents, like a passport or driver’s license, as collateral for the loan.
Undoubtedly, Sangla ATM is hazardous because the people who run the machines are loan sharks and will charge you more money than they lend you. Furthermore, it puts people at risk of financial loss and makes identity theft and unauthorized transactions possible.
No Formal Contract
When you get a loan from official lenders such as government agencies or banks, you will receive formal contracts which record all transactions. However, if you borrow money from a loan shark, no documents specify that loan.
Because no official contract is written, no one can file a complaint about any breaches of the agreement.
Additionally, because there is no proof that any verbal agreements were ever set or written down, or even if the borrower did sign something at some point, it would be very unlikely that any legal action will be taken in favor of the borrower.
No Repayment Records
There is also a shortage of a repayment record when the borrowers repay a loan shark. This allows criminal financial institutions to increase the debt since borrowers may not track how much is left to pay.
Unfair Debt Collection
Loan sharks are notorious for pressuring borrowers into paying them back by using violence and threats.
The loan sharks know that most people facing financial difficulty will borrow more money than originally agreed upon. Without this option, all the loan shark’s “clients” will eventually go bankrupt.
Loan sharks will likely syndicate, kidnap the borrowers, and require their families for money to force them to repay whenever they owe.
Some Tips to Fight Loan Shark Harassment
There is no doubt that you should not make a loan shark. Nevertheless, if you have to do so for personal reasons, you can follow the following ways to fight loan shark harassment.
Make Transaction Records
Save a photocopy or image of related documents of your loan and record all transactions with the lender or any additional information that may be pertinent.
Individuals who used to have experience with this kind of unlicensed debt measure should record all of the calls in detail, including their names, what agency, calling purpose, and unsuitable remarks.
Make transaction records to save you from loan sharks’ risk!
Secure Proof
It would be best to take a photo of your screen of incorrect status on social platforms that calumniate you as a borrower.
Loan sharks have a resource of social media gossip by posting details of the customers without permission or after being rejected in an attempt to embarrass the subject. If you are a victim of this activity, don’t hesitate to take a photo of that post and report it to the PNP-ACG at any time.
Report to the Competent Authorities
You have the possibility of contacting various government agencies if you feel harassed by a lender. The SEC can help borrowers with problems with their loan relations, relying on the raised problems.
If any criminal liabilities result from the complaint, you must look for help from the local courts.
Some Tips to Escape Loan Sharks
It is the best choice to get away from loan sharks. It would help if you remember the following tips to avoid making a loan shark one more time:
- Be careful when transacting and stop immediately if you realize that the lender has any signs of the loan shark.
- Be wary of strangers who contact you to offer you a loan.
Many scammers use public documents to try and reach their victims, so if you see an unsolicited text message or email which offers you massive loans, skip it! Official lenders don’t normally contact people to offer loans like that.
- Make sure the lender is registered. Use the SEC’s website to check under a company name’s registration certificate if they are active in the country. If not, ASCO (Asset and Security Center Online) can help confirm whether a company exists or not using its database system.
- Consider other options for getting funds. If you’re not accepted for a loan from the bank or another business, take an opportunity to look into individual lenders who might still be able to approve you to lend despite your low credit score or your low income.
- Make sure you manage your debts responsibly so that you don’t need to resort to the extra-legal means known as loan sharks to cover your payments.
Conclusion
We believe that you have already understood what a Loan Shark is and why you need to avoid borrowing money from this kind of lender. Loan sharks may be much more dangerous than you think if you accidentally make a loan from them.
So be careful. We hope that the tips above can be helpful for you. If you have any questions, don’t hesitate to contact us. We are always willing to support you.
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