The Game of Loans: Dark truths of loan sharks no one talks about

Financial stability is something each of us craves and desires. Despite our best efforts, there can be times when a financial emergency may topple our plans, and we might need financial help. With the hassle of borrowing from traditional financial institutions and a lack of awareness about other legitimate lenders, more and more people fall into the trap of loan sharks and an inescapable cycle of borrowing.

What is a loan shark?

If you are looking for quick cash and do not have security, you are bound to turn to a loan shark. A loan shark is an individual or an entity, who offers monetary loans to people. The rate of interest on these loans is typically very high and comes with very strict terms of collection. A loan shark often uses threats and violence to collect their debts.

The way loan sharking works

A loan shark can be an individual or a group of people offering loans to others at interest rates much higher than standard interest rates. The victims are mostly people with low income or small businesses in a cash crunch. Loan sharks may operate through the internet or via personal networks. The funds that they usually offer are from unidentified and undisclosed sources. 

However, in contrast with other lending institutions and mechanisms, loan sharks do not need background checks or credit reports of people who seek their financial help. They wilfully offer large sums of money to people in need with the motive of charging high rates of interest.

For instance, a loan shark may lend INR 1,00,000 to a person with the condition that INR 2,00,000 be paid to him in 30 days. There have been numerous incidences when such lenders have called for repayment before maturity and often resort to threats and physical harm to force repayments.

Signs To Spot A Loan Shark

  1. Loan sharks lend money at high-interest rates.
  2. Ask and require little to no paperwork. No credit or payment records are required.
  3. They use threats and violence to force repayment. 
  4. Change the interest rate or add additional charges at any time.
  5. They may even refuse to settle your debt and cause harassment.
  6. Use of threats, intimidation, and violence.

How to avoid a loan shark?

The vicious cycle of borrowing and lending has been operating for a very long time. You can always take precautionary methods to ensure that you don’t fall into the jaws of a loan shark, even as a last resort. There are always better options out there. 


  1. Start building an emergency fund so that you are not in urgent need of a loan.
  2. Manage your business finances better
  3. Never accept cash loans, no matter how nice and friendly the lender might look.
  4. Never share your financial details with strangers. 
  5. Be on the lookout for possible signs of a loan shark.
  6. Reporting loan sharks and loan sharking is very important to protect yourself and society from them.


  1. In case of loans, reach out to banks and registered institutions for financial aid. These are recognized institutes and will never indulge in illegal activities.
  2. Neobanks and FinTech are often healthy alternatives to traditional banks, as they offer instant, short-term loans at low-interest rates.
  3. There are many credit unions to help people in financial crises. They will not only offer a better rate of interest but give great financial advice too.
  4. Use credit cards and overdrafts in case of emergency.
  5. Charities and government aid are also available in cases of financial assistance.

Being part of an economy and business opens you to various risks and circumstances. With uncertainty in markets and the economy, cash crunches may be inevitable. With awareness and a touch of common sense, these situations can be handled smoothly. Loan sharks have been part of the financial system for way too long, and with the rapid growth in technology, it is time to put it to an end. 

Here, at Salt, we’ve always put consumer awareness and safety at the forefront. Our blog will be regularly updated with posts on personal finance, banking, and more to raise awareness of the different alternatives available for you, as an end consumer. 

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