Don't tell me where your priorities are.

Show me where you spend your money and I'll tell you what they are.

-James W. Frick

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Thursday, March 29, 2012

Loan Sharks

Personal Finance 4 The People is pleased to team with others who are able to share their expertise in various areas. We hope to combine our efforts to bring a greater financial effort inorder to help you reach YOUR Financial Independence. Today's guest post comes to us from the Loan Shark Guide.

      In case you haven’t been keeping a close eye on the news lately, let me be the first to bring to light a breed of financiers who are running people lives.  These illegal financiers, otherwise known as loan sharks , are becoming more of a problem not only in the UK and abroad, but also here in the United States.  For the most part, individuals and families who are in desperate need in money, often times fall prey to these lenders.  In the U.K, for example, there is a task force whose sole purpose is to target and eliminate these financial predators.  Lending money illegally, without a license and at exorbitant interest rates, is a crime punishable by a lengthy prison sentence.
How Do Loan Sharks Operate?
     These illegal money lenders prey on people who are in desperate need for finances, and whilst they may loan the money to an individual, the interest rate is all too often unbearable.  The person taking the loan out will often pay more toward the interest than toward the principle, which will leave the debtor in a position that he/she, in effect, can never pay off the loan because all of the payment is being applied to the interest rates.  The interest rates charged by these lenders can often times be as high as 4,000%.  How can anyone ever expect to pay off a loan with high interest rates such as that?
What Are The Alternatives?
     If you have bad credit and cannot obtain a loan from a bank or other legitimate lending institution, then your best bet is to find a low APR loan. It depends on what you need the loan for.  Unfortunately, if you need a personal loan higher than $2,500, you’ll most likely be out of luck.  If you need a loan under $2,500 then your best bet is to find a payday loan company that has a low APR, and also gives you ample time to repay the loan.  Be sure to compare payday loan providers when looking for these types of loans.  Whilst getting a payday loan isn’t the best option in most cases, these types of loans are usually the only financial option for many people who have ruined their credit.  Quite a few people have been known to obtain payday loans from different companies at the same time, and by doing so, they unfortunately create more financial misery for themselves.
     If you find yourself in a situation where you need a loan, consider your options and do not take the first loan that comes along.  Remember to compare payday loan providers, as each provider has different interest rates.  Also remember, that if anyone ever approaches you and offers to loan you money (without being licensed), then they are loan sharks.  Never borrow money from these individuals or groups and report them to your government.  As a civilization, we need to help others less unfortunate know the signs of borrowing from loan sharks.  These types of lenders are dangerous and should never be considered an option.

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