Loan shark facts for kids
A loan shark is someone who lends money to people but charges very, very high interest rates. An interest rate is like an extra fee you pay for borrowing money. Loan sharks often ask for something important from the person borrowing money, like their passport, before they give them the loan.
People might go to a loan shark for many reasons. Often, it's because they can't get a loan from a regular bank or another legal lender. This could be because they don't have a good credit history, or they need money very quickly.
Contents
Why Are They Called Loan Sharks?
Loan sharks get their name because they act a bit like real sharks. They can be aggressive, greedy, and very determined to get their money back. They often operate outside the law, which means they can't use normal legal ways to collect debts.
How Loan Sharks Operate
Since loan sharks often work illegally, they can't go to court to make people pay back their loans. Instead, they might use unfair or scary methods to force people to repay the money. This can make borrowing from them very dangerous. They might threaten people or try to scare them into paying.
The Dangers of Loan Sharks
Borrowing money from a loan shark is very risky. The interest rates are usually much higher than what banks charge, making it very hard to pay back the loan. People can end up owing a lot more money than they first borrowed. Also, because loan sharks operate outside the law, there are no rules to protect the borrower. This means people can get into serious trouble if they can't pay back the money. It's always safer to borrow money from legal and regulated lenders.
Images for kids
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A sticker in Singapore to make people aware of loan sharks.
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A pamphlet for a loan shark, found in Malaysia.
