What Is the Definition of a Loan Shark?
A loan shark is a person who lends money at excessively high and possibly illegal rates of interest. Historically, loans sharks were tied to organized crime but more recently, consumer-protection groups have accused payday and subprime lenders of the practice.
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Significance
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Prowling predator The term refers to the predatory nature of the lender, who takes advantage of the borrower's desperation or inability to borrow money through more legitimate channels.
The National Association of Consumer Advocates describes different types of predatory lending and consumer's rights at http://www.naca.net/predatory-lending-practices/.
Prevention/Solution
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The Consumer Federation of America's consumer help page offers tips on how to cope with a cash-flow gap without borrowing from predatory lenders at http://www.paydayloaninfo.org/consumer.asp.
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Warning
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Loan sharks may use threats of violence or damage to a person's reputation as a way to ensure the loans are repaid, according to Forbes Digital's Investopedia. If you owe a loan shark, seek a financial or legal professional's advice.
Federal Oversight
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To file a complaint about predatory lending with the Federal Trade Commission, visit https://www.ftccomplaintassistant.gov/. While the FTC does not resolve individual complaints, all reports help the agency detect patterns of wrongdoing and can lead to investigations or prosecutions.
Fun Fact
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"Loan Shark" was a 1952 noir-style gangster film in which a violent loan-shark ring targets tire factory workers, according to The Internet Movie Database.
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References
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- Photo Credit Image by Flickr.com, courtesy of デニス モジョ Image by Flickr.com, courtesy of Allan Lee
