You can find them on websites that you did not even click on. As advertisements in the local newspaper or as a mail in the local mailbox. Especially in the times of the banking crisis, when the interest rate level was particularly low, one was almost swamped by loan offers that promised high loan amounts on particularly favorable terms and even today, more banks seem willing to spend installment loans on “borderline cases”.
Of course, there is not a loan shark behind every offer, so it’s important to pay attention to a few elemental things in order to expose almost any temptation.
Pay attention to the shape
Before you even deal with the loan offers, you should first pay attention to the obvious, the look and formatting.
- Does the offer contain many exclamation points?
- Is perhaps even of “instant loans” the speech and promises “high loan amounts within a few hours?
- Does the offer generally contain little information?
- Is advertised only with offers, but not with conditions?
Then you have already found the first clue that this may not be a particularly serious offer. Anyone who gives out loans on an entrepreneurial basis always takes a risk and, of course, serious providers want to keep it as small as possible, which is why they usually select their customers exactly. Anyone who promises quick decisions about large sums deliberately takes a high risk.
In Germany, the Dufol (Federal Financial Supervisory Authority) is an important body that, among other things, also handles the licensing of loans. If banks are registered with the Dufol, this is usually mentioned somewhere, for example in the imprint or in the terms and conditions. Anyone who doubts whether it is a reputable bank can look up the licenses issued to the companies on the website of Dufol itself. If nothing is recorded there, it is not just a loan shark, but also a criminal who pulls money from unsuspecting borrowers.
Where does the money come from?
Until a few years ago, the terms of loans were still fairly tightly regulated. Today, however, European law only stipulates that the corresponding amount must be available, which gives loan sharks a relatively free hand as they shape their contracts. Incidentally, it is irrelevant whether one lends his own or someone else’s money, which is why many of the loan sharks do not even lend their own loans, but only mediate. So they kill two birds with one stone, because on the one hand they do not lose their own money if the customer does not pay, on the other hand they can demand immense costs for the mediation.
So before signing the contract, you should read carefully about where the money actually came from, so that the loan sharks do not earn double.
Interest and compound interest
If banks and credit institutions demand too high interest rates for the granting of loans, this is called “immoral interest” , which can even lead to the dissolution of the contract in court.
Unfortunately, it is not clear where usury begins, which is why it is best to compare several offers before contract negotiations.
The interest rate of today’s installment loans is usually between 3.5 and 12%.
Everything that goes beyond that does not necessarily have to be considered immoral in court, but it is definitely usury and should be avoided if possible. Incidentally, things are a bit different with overdraft loans or tolerated overdrafts. Here, deliberately higher interest rates are used, as the flexible availability is associated with a higher administrative burden.
Anyone who gets into trouble, is unemployed, has too many debts or has already used installment loans, but has not repaid them, will generally be denied the further attempt to borrow. This is because – as already mentioned – credit institutions try to keep their risk as low as possible. A method often used today to assess the risk or the so-called “credit rating” is credit bureau scoring.
The credit bureau (protection association for general credit protection) is a fundamentally independent company, but has so many members that lenders often orientate themselves to it. In contrast, rogue banks often advertise with phrases such as “even with negative ratings” or “no credit rating”, in order to trap especially desperate borrowers.
Although the internet in particular suggests that loans can grow on trees and that one can borrow huge sums of money within a few hours, such a loan offer usually includes a loan shark whose interest rates are in the range of usury and, in the worst case, without corresponding monitoring Dufol, that is illegal, acts. Also behind credit brokers are often loan sharks who do not want to lose their own money.
If you want to make sure, check the offers according to our aspects described here. Then loan sharks have no chance.