A loan shark is a very common term that is used for money lenders who land money illegally with a high interest rate. Usually, loan sharks target people who need immediate money and they can borrow money from legal sources. Loan sharks remain very friendly at the beginning but if the borrower misses any payment or doesn’t able to pay the full amount in time they become aggressive and misbehave with the borrower. In some cases, loan sharks threatened the borrower for the money. But, can a loan shark take the borrower to the court?
No, a loan shark can’t take you or any other borrower to court because the way they have lent you the money is completely illegal. Usually, loan sharks lend money without any paperwork so there is no way they can prove that you have borrowed money from them. In fact, if you refuse to pay the borrowed money then legally a loan shark can’t do anything because not repaying a loan from an unlicensed lender isn’t a criminal offense by law!
Jump To A Section
- 1 How Loan Shark Illegally Lends Money?
- 2 Can A Loan Shark Take You To The High Court?
- 3 Federal Law Protection For Loan Sharks
- 4 How To Spot A Loan Shark
- 5 What To Do If You Owe Money To A Loan Shark
- 6 How To Deal With Loan Shark
- 7 FAQs About Can A Loan Shark Take You To Court
How Loan Shark Illegally Lends Money?
If a lender doesn’t have a license to lend money then he/she is considered a loan shark. There are various ways a loan shark offers a loan. They are –
1. Loan sharks don’t use any authentic documents to give the loan
2. Don’t share any information regarding the loan
3. If you aren’t able to pay the money in time then they will ask for valuable items of yours in return for the money
4. Loan sharks will keep your property if you don’t pay the money in time
5. Loan sharks offer loans with high interest rates so the debt never comes down
6. Loan sharks don’t give loans under Financial Conduct Authority
Can A Loan Shark Take You To The High Court?
If you borrow money from a loan shark and now the loan shark is threatening you to take you to the court then don’t be afraid. There is no way a loan shark can take you to the high court. The main reason is, loan sharks are illegal, therefore; they won’t take the risk of taking you to the court. Loan sharks don’t have the desired license to lend money and do not lie under the federal conducting authority. So, they will never take you to the high court.
Federal Law Protection For Loan Sharks
There are some federal laws available that will protect you from loan sharks. You should have some idea about these laws to protect you from illegal money lenders. According to the federal law protection –
1. The lender is bound to tell the cost of the loan
2. The lender has to disclose the actual finance charge of the loan
3. The allowed interest rate is 2.75 percent per month or 33 percent of annual interest on the loan from 1000$ to 2000$.
4. The lender has to share the annual percentage rate with the borrower
5. The financial institution must have a license to offer a loan
6. Every loan must have some terms and conditions that require approval from the lender as well as the borrower
How To Spot A Loan Shark
Loan sharks have some common characteristics that will help you easily spot a loan shark. They are –
1. No paperwork
2. Cash loans or bank transfer
3. Don’t share information regarding the loan
4. Takes possessions for security
5. Loan keeps on growing due to high-interest rate
6. Threats of violence
What To Do If You Owe Money To A Loan Shark
If you owe money to a loan shark then you can seek help from credit counseling agencies. Credit Counseling Agencies can be a great help for you because they provide guidance on the following perspectives –
1. Debt Management
3. Money Management
4. Guidance for debt repayment
5. Consumer credit
6. Avoid Bankruptcy
7. Loan Shark Debt, etc.
These agencies require fees if you want help from them. But, every borrower should take proper counseling from these agencies especially if you have borrowed from loan sharks. These agencies can help the borrower to earn money from licensed parties as well as solve the complexity created by the loan sharks. These agencies take proper legal actions to get rid of the loan sharks and save your money from the loan sharks. Moreover, if you face a financial crisis because of the loan sharks, then these agencies will lend you money from the certified organization or banks.
How To Deal With Loan Shark
If you have taken a loan from a loan shark and now looking for ways to deal with them then you can check the below tips. These tips might help you fight back the harassment from the loan sharks. Let’s check them out.
1. If you receive unsolicited messages from the loan sharks then don’t reply to them. Contacting loan sharks is illegal and it helps them to establish their authority in the modern world.
2. Law and enforcement from every country have a dedicated department to help the loan shark victims. So, don’t hesitate to call the local authority if you think, you are a victim of loan sharks.
3. It’s common for loan sharks to threaten you or your family with violence. So, call the police before loan sharks harm you or your family. IF a loan shark harasses you or your family member then immediately take legal action against them.
4. If you keep paying the loan shark then they will think you are still within their influence. Therefore, you should stop paying the money.
5. If you are a victim of a loan shark then you can also get help from social service agencies.
FAQs About Can A Loan Shark Take You To Court
1. Can You Report A Loan Shark To The Police?
Yes, you can report a loan shark to the police. Loan sharks are illegal so you can report to the local law and enforcement department without any hesitation.
2. How Do I Fight Loan Shark Harassment?
If you are a victim of loanshark harassment then immediately report it to the local police station. If authorities can’t reach you on time then you can also seek help from various social service organizations.
3. Is It A Crime To Borrow From A Loan Shark?
No, it is not a crime to borrow money from a loan shark. However, it is completely illegal to lend money without a consumer credit license or approval from the federal authority.
4. What Is Another Name For A Loan Shark?
There are few other names available for loan sharks like moneylender, pawnbroker, financier, money monger, etc.
5. Is It Illegal To Not Pay Back A Loan?
If you took a loan from a bank or any other licensed financial institute then you have to pay the loan in time. If you don’t pay the loan then it will be considered a crime and the creditor can take legal action against you. However, if you take a loan from a loan shark then it won’t be illegal to not pay back the loan.
Magalie D. is a Diploma holder in Public Administration & Management from McGill University of Canada. She shares management tips here in MGTBlog when she has nothing to do and gets some free time after working in a multinational company at Toronto.