Loan sharks are predatory money lenders who provide easy loans with little or no documentation or credit checks. They call it unsecured loans. Their loans often come with high, unexplained interest rates and surcharges.

And if borrowers fail to pay, these lenders resort to tactics such as harassment, intimidation, blackmail, and outright violence.

With the rise of digital platforms, loan sharks have found new ways to target unsuspecting victims. Smartphone apps that promise quick loans with minimal checks have made it easier for these lenders to cast a wider net. A comprehensive article by the International Centre for Investigative Reporting, on how loan sharks in Nigeria cyberbully, and trap customers in debt can be found here.

To protect yourself and your loved ones from the humiliation and harassment that digital loan sharks use, it is crucial to understand their actions and take necessary measures to safeguard yourself.

How to identify loan sharks
StopLoanSharks, a UK agency for investigating and prosecuting loan sharks gives a handy method on how to identify loan sharks. According to them, if you can answer yes to one or more of the following questions, then you may be dealing with a loan shark.

- Did they offer you a cash loan?
- Did they not give you the paperwork?
- Did they add huge amounts of interest or APR to your loan?
- Have they threatened you?
- Are you scared of people finding out?
- Have they taken your bank card, benefit card, passport, watch, or other valuables from you?

For digital loan sharks, the second question above is the most obvious red flag. Some digital loan sharks only need your bank verification number to issue a loan.

That it comes so easy doesn’t mean it doesn’t have dire consequences.

Digital loan sharks have also been known to ask for very high-interest rates often masked as weekly or monthly rates. That 5% per week can easily rack up fast when you multiply it by 4–8 weeks.

Why you should avoid loan sharks
It is crucial to avoid loan sharks for several reasons, and your peace and safety are at the top of the list.

While it is understandable that some individuals may need to borrow money to meet pressing needs, turning to loan sharks can lead to a vicious cycle of debt, anxiety, and unrest. What may have started as a small loan can quickly spiral out of control, leaving borrowers struggling to repay with high-interest rates and hidden fees.

Aside from the financial stress, borrowing from loan sharks can also negatively impact your health, self-image, and dignity. By avoiding loan sharks, you can protect yourself from the physical, emotional, and financial harm they inflict.

I borrowed money from a loan shark, what do I do?
Your first step is to hold off on borrowing from Peter to pay Paul.

There’s the immediate feeling to download another app, borrow and pay off the first loan. The danger is you get sucked into the dangerous cycle of borrowing from multiple apps. Here are some other steps you should take:

- Talk to someone about it.
- Seek help from close family and friends to offset the loan.
- Check yourself if any lifestyle habits may have led you to borrow. Make conscious efforts to fix them.
- Consider a lifestyle change to match your current income level.
- Get a job or start a business.
- Consider getting law enforcement involved.

Tips to protect yourself from loan sharks
- Where you need to borrow, ensure it’s for a purpose that will ultimately bring in income or get you on your path to generating income. As much as you can, avoid borrowing for non-essential needs.
- Ask yourself the questions above to identify if your lender is a loan shark. If yes, seek other alternatives.
- Consider taking soft loans from family and friends instead. But don’t abuse the privilege.
- Always have a loan payback plan.
- Pay back all loans on time.
- Consider accessing loans legally.

How to access funds legally to meet emergency expenses.
Thankfully, traditional banks have streamlined the loan application process using technology as well. However, they require proper documentation and, in some cases, you will need to open a bank account with them.

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Final thoughts
One major area of concern is the lack of proper orientation on the part of borrowers, so it is important to sensitize the public.

Some borrowers think digital loan sharks are giving “free money,” so they go on a borrowing spree from multiple smartphone apps. You hear cases of people borrowing to gamble, for non-essential travel, or other unimportant needs.

Loan sharks are ruthless in loan recovery. Their rates and hidden charges are higher than the industry average, which they cloak with the perceived ease of providing loans to borrowers. There is a reason they are constantly being shut down by governments.

Avoid them or seek better alternatives if you must borrow.