What is illegal money lending? Illegal money lending occurs when you are offered money on extremely high interest rates. These lenders often operate outside the law and have very strict collection conditions.
In addition to requiring high interest rates, many of these lenders use predatory tactics in an effort to rip you off. Read on for some warning signs of illegal money lending. Hopefully, you’ll avoid being scammed and find a legitimate source of money lending.
The term “loan shark” is synonymous with extremely high interest rates. These loans often have strict terms for collection if you don’t pay back the money.
Generally, these companies operate outside the law and shouldn’t be trusted. There are many ways to avoid falling victim to loan sharks, however. Listed below are a few things to watch out for. Let’s begin with understanding loan sharks!
These loan sharks may be portrayed in movies, but they’re not nearly as violent in reality. Instead of using violent threats to steal a borrower’s identity, these predatory lenders use a variety of tactics to scam their victims out of their money.
The internet has also opened up new ways for unlicensed moneylenders to operate. Here are a few of the most common ways they operate.
High interest rates
If you think your loan has an illegal interest rate, you should immediately seek legal advice. An attorney can navigate the complicated exemption system and laws.
An illegal loan may be able to be cancelled, your interest rate reduced, or the money refunded. If you are unaware of the law or believe you have been victimised, you should contact the Attorney General’s Office and seek legal advice.
The Federal Trade Commission will review cases where an illegal interest rate was charged and help you determine the legality of the loan.
One of the most common predatory lending practices is the use of hidden charges. These charges are often hidden in the fine print and don’t become payable until the borrower has missed several payments.
Another common practice is “packing,” which is when predatory lenders sell additional policies with a loan, usually insurance products. The client is then charged more for little or no benefit, despite the higher rate.
Predatory lenders also target minority neighborhoods and often use advertisements in foreign languages to attract clients from these communities.
Illegal money lending can be devastating for those affected by it. Knowing how to get the appropriate support and help is crucial. Because the process of illegal money lending is often coercive, victims often feel alone.
But support for victims is out there. The Illegal Money Lending Team report explores some of the characteristics of victims and the ways in which they are impacted. Victims often have low incomes, are unemployed or suffering from poor health, and already have debts with legal creditors.
In addition to these characteristics, victims are often victims of illegal lending because of cashflow problems and/or are small businesses.
If you’re concerned about a situation where you’ve been offered a loan without any information, reporting illegal money lending is vitally important. Illegal money lenders can pose as legitimate money lenders, but they’re actually illegal.
If you’re receiving calls from unknown numbers, hang up right away. Similarly, you should report any posters that are posted in your neighbourhood. These are all signs that you may be dealing with an illegal money lender.
What Are the Legitimate Alternatives to Illegal Loan Sharks?