Who is a loan shark? As a first home buyer, you might not be aware of this term. A loan shark is an illegal or immoral lender who takes advantage of vulnerable people. They charge high-interest rates and target people who desperately need a loan but are somehow unable to do so.
Having a bad credit history often becomes the reason for pushing someone to borrow money from an unlicensed lender. But it is imperative to spot and stay away from these loan sharks. You can also take professional advice from the best mortgage broker in your area to stay safe from such lenders. After all, nobody wants to be associated with a person who operates illegally or on criminal lines.
The term ‘shark’ is used to denote the predatory nature of such lenders. They charge high interest rates and, in case of a payment failure, even go so far as to harass, intimidate and frighten people with violence. While modern-day loan sharks primarily operate on the internet, a little caution can help you steer clear of them in the real world, too. Nothing is more important than your peace of mind, so we have compiled a list for you. For more information on getting loans and avoiding loan sharks, call:
Loan sharks are unlicensed and illegal money lenders. They operate outside the law, so they keep away from all the legal procedures. They might appear friendly, but their real intentions aren’t. If you are suspicious of a lender, look for how they are processing your loan request. Sometimes, it’s hard to spot them, but there are always a few signs that give them off.
If there is no paperwork involved and your loan is being disbursed through cash or bank transfers, know that you are dealing with a loan shark. They might refuse to give you any information about the loan. They might also take possession of your valuables or documents for security. Your loan will keep adding up, and you might be pressured into borrowing more from them
2. Borrow from a licensed lender as a first home buyer
It’s always best to borrow money from a licensed lender. They can offer credit under the National Consumer Credit Protection Act 2009 and follow the government’s codes of practice. You can get a loan with a licensed moneylender even with a low income or poor credit score. If your need is urgent, a licensed money lender can also help you borrow a small amount for a short period.
Borrowing from licensed lenders has a host of benefits and covers. They are genuine and reputable lenders operating under the law. It’s a good idea to look around a bit for all the options available at your disposal. And if you do so, you might find one that serves your needs the best. With a licensed moneylender, the Consumer Credit Act covers your loan agreement.
Not sure how much you can borrow as a first home buyer? Connect with the best mortgage broker in Sydney to know your borrowing power. You can also calculate your borrowing power here:
3. Check the lender if you are doubtful
Anyone who lends you money needs to have their credit license listed on the Australian Securities and Investment Commission (ASIC) register. You can do a background check on your lender anytime before borrowing if you think the lender isn’t genuine. To check a lender’s listing, you can visit the ASIC website.
Even if you end up borrowing from a loan shark, don’t worry. You haven’t broken the law. You are under no legal obligation to repay the debt; there’s legal help available. Your lender can’t legally recover the debt from you, and anyone who harasses you is breaking the law. Contact your local Trading Standards Office immediately if you have borrowed or been harassed by a loan shark.
4. Try alternative sources to obtain a loan.
You can consider borrowing from a credit union if you need a small amount for a short time. Their interest rates are comparatively low, and they also guide you through the process, helping you choose the best option for you. Credit unions also encourage good financial practices.
Moreover, there are several government schemes and benefits that you might be eligible for. For example, you may check if you can receive an advance from Centrelink (Phone: 13 17 94). There’s also expert financial advice and counselling available with government sources to help you improve your financial situation.
5. Reconsider your loan requirement
Before you decide to borrow money, pause and think about how you can do without it. This is an excellent exercise to help you avoid unnecessary financial burdens. For example, you can work out payment plans with your household service providers, save money and cut down on leisure activities. You can also seek out government help if your financial situation is unfavourable.
If you are struggling with your finances, the National Debt Helpline (1800 007 007) can help you. You will receive free financial counselling in your state through this nationwide hotline. They might also suggest various ways to improve your financial situation. As a result, you can bring your debt under control and your expenses on track with them.
Now you know how loan sharks can harm you and your financial health. As a first home buyer, you need to be cautious so that your home buying journey doesn’t cause you any trouble. However, a little effort now and then can help you a lot and take you a long way. And while you are making that effort, the best mortgage broker in Sydney can help you make it fruitful.
If you have questions or queries concerning your home loan, dial ‘1300 GET LOAN’ (or 1300 438 562) or visit