South African loan shark agencies have many people indebted to them for huge amounts. By charging high interest rates that clients cannot possibly afford to pay, and lending money without surety or collateral, loan shark agencies are often criminals who collect their pound of flesh by any means possible.
Taking out a loan from a financial services provider who is not reputable could cost you your financial freedom and credit record in the future. If you are battling to get a loan from a financial services provider with a good reputation, it is likely that you:
- have not got a good credit record,
- you do not have an income
- or you do not have a high enough income to make the monthly payments.
These are all good reasons to not take out a loan as it is likely that you will not be able to pay it back and cover all your monthly living expenses as well. However, if you desperately need to take out a loan you must avoid lending from loan shark agencies at all costs.
What do loan shark agencies do?
Loan shark agencies will lend you money even if you do not meet the requirements (see the previous three points) for taking out a loan with most reputable financial service providers. The loan shark agency will then lend money without asking for collateral and without any security. The interest rate that loan sharks charge on their loans is incredibly high, and is often quite impossible to pay. Although interest rates might start out at a high, but manageable twenty % of the loan, they will usually compound sometimes on a weekly basis and you could end up owing over 1 000 % interest in a very short period of time.
The perception
Loan shark agencies make their money out of their absurdly high interest rates. They are perceived to be criminals, or persons associated with law avoidance, who will use blackmail and threats of bodily harm to extort their money out of debtors who do not or cannot afford to make their payments.
Loan shark agencies in South Africa, is poverty and unemployment a cause?
South Africa has a very high unemployment rate and a huge majority of people who are living in abject poverty or very near it. Loan shark agencies have been known to take advantage of people in this situation by offering them money when no other financial service providers will. Many people who do not know the danger of getting a loan from loan shark agencies will make the mistake of falling for their schemes and get in over their heads financially. Even if they do know that there is some danger, because no other, more reputable financial service provider will loan them the money that they so desperately need, they might be tempted to take out a loan from a loan shark agency.
The urge to buy, buy, buy; another cause
Because we live in a consumer driven society where there is a drive to buy, buy, buy, many people buy beyond their means and find themselves in financial trouble. Many people are tricked by society, advertising and capitalism in general into believing that they NEED certain items or experiences to be happy or to be worthwhile human beings. Most people want to own fancy houses, top of the range technology, have outdoor toys like speed boats, jet skiis and four wheelers and go on regular holidays to the sea side or mountains and stay in luxury accommodation. We all believe, at some level, that we will manage to stay out of financial trouble, that we will never really find ourselves in serious debt. Unfortunately, because loan shark agencies are so accessible, taking out a loan for things that you cannot afford will be very easy to do.
South African loan shark agencies are a very real danger to everybody’s financial situation. Never trust a financial service provider that is not reputable and never get in over your head.