In times of financial hardship, the promises of lending alternatives with loan sharks become tempting. After all, with financial crisis, unemployment growth and the basic bills of light, water and food that only rise, for most Brazilian families, it is difficult to sustain without incurring debt.
It is in this scenario of desperation and attempted debt repayment that a loan shark presents his false “easy credit opportunity” to lure the needy into a huge financial trap. This is a danger. In this text you will know why not take loan with a loan shark.
How does a loan shark act?
Agiota is that individual who offers a financial loan out of the legal credit market. By not following the rules, they use the argument that there is no need for documents or proof of income to lend, with “quick and easy” money in the hands of the person.
The main target of moneylenders are individuals who are indebted and / or need large amounts to meet an emergency and who, because of their dirty name , can not legally lend to banks.
But make no mistake: believing in a loan shark is extremely dangerous. Continue reading and understand why you should not take a loan with a loan sharks under any circumstances:
Four reasons why you should not take payday loan with loan sharks:
1. The practice of moneylending is a crime
Moneylenders take advantage of the financial vulnerability of others to enrich themselves illegally, using non-compliant agreements to be able to take advantage of permissible lending services, and still get more financial returns.
This type of activity constitutes a crime against the popular economy, according to Article 4 of Law 1521/1051 . In this article, it is defined as a crime to collect interest or commissions on debt using rates higher than allowed by law (the limit is 12% per year, according to our Federal Constitution), with a penalty of six months to two years imprisonment .
It is good to clarify that lending among individuals is not immediately criminal. So it is okay to take out loans with a civilian as long as you follow the rules and have legal mediation, either by an official contract or by an accredited company.
And, even, to charge interest, as long as they are low, only to reimburse the amount monetarily lent. This will demonstrate the objective of helping, not profit.
2. Interest rates are abusive
One of the main reasons for the moneylender to be illegal is precisely because the interest is higher than allowed. They do this because the goal of the loan sharer is never to solve their problem, help to pay off debts and realize their dreams, on the contrary, they seek to enrich through the abusive interest rates on the loans.
They may even “give” you money at first, but what they make in return is enough to make up for it and make them profit from the blow.
While in banks and legalized financial institutions the interest is usually less than 10% per month, moneylenders charge much more, 20%, 50% and up to 100% a month.
Because they are not regularized, they themselves choose the values, reaching those numbers that cause real inconvenience when returning.
This is because a person who urgently needs money in this way is hardly able to collect not only the initial amount, but double it in a month to make the payment. Thus is generated a snowball effect, in which each month the debt only increases and the difficulties to pay as well.
3. The guarantees requested are greater than the loan
The loan officer may not even ask for your proof of income to make the loan. But he will ask for personal property as collateral, items such as jewelry, cars or even real estate, much higher than the loan.
It is for this reason that they use high interest rates and they know that the debtor will not be able to pay. They expect this to happen to take these much more valuable goods for themselves.
To be entitled to the assets of the guarantee, they even falsify legal proxies or property sale documents, signed by the individual, to simulate legality and have the false judicial power over their assets. This is done to discourage the victim from prosecuting after the event and for the prosecution to be hampered.
4. Methods of collection are violent
Even if the ultimate goal is to earn your equity, it does not mean that they will simply pick you up and end the contract.
Since the goal of the moneylender is to enrich as much as possible, they will do everything to extort the indebted to the maximum, charging the installments of payment until there is nothing left.
To get what they want, their methods have no limits. They use threats of violence on the individual and their family members, often departing for aggression.
Their idea is to put fear into the debtors to force them to turn in every penny they have to pay their debts, even if that means giving up food or buying a major drug.
No matter how much the person is able to plan and repay the loan completely, they can at any time change the rules in default to increase interest or remain with the equity of the collateral.
Because it is an informal transaction with no legal validity, appealing in court in such cases is very complicated and the loan sharer can even increase the violence to silence him and avoid a complaint. It’s a very dangerous scenario.
What are the alternatives to pay my debts?
There are some strategies to adopt and get rid of your debts, such as making a plan to cut unnecessary expenses , seek extra income by selling sweets, for example, or at a temporary job.
If it is not possible, there are legal methods of lending to help pay the bills without having to take loan with a loan sharker.