Adverse Credit Loans and Loan Sharks: Not the Same Banana

When people encounter dire financial situations, it is almost always instinctive for them to grab the nearest credit card in sight. Actually, even for just regular transactions, even at times when things aren’t too tight, people use credit cards all the time. Unfortunately, a majority of these people do not account for the possible scenario where the inflow of funds thins out – like what is happening right now for most of us.

Because of this phenomenon, the affected individuals’ respective credit ratings dip to very low levels, making it harder for them to secure loans for pressing needs. With this comes the advent of adverse credit loans – financial options which can be obtained in spite of the possession of a poor credit report.

But there a common confusion – a lot of people mistake a lot of legitimate institutions, those who issue loans even with adverse credit, for loan sharks. There are two major differences between the two, as will be explained in the following paragraphs:

Legitimate institutions offer clear-cut terms and conditions before issuing anything. Meanwhile, loan sharks oftentimes rely on shady methods to get things done. Essentially, the difference is spelled in 12 letters – transparency. This is important in every undertaking. If most people despise companies for the “fine print” in legal contracts, then they would detest loan sharks even more for not even bothering to print anything.

Loan sharks typically work outside the umbrella of government regulatory agencies. They do not adhere to pre-set guidelines prescribed by the law in order to protect consumers from going further down in debt. Legitimate institutions, on the other hand, are not only comparatively more responsible in as far as consumer welfare, but are also heavily regulated by the government. Thus, it is safer to rely on the latter for financial aid, as their tendency to abuse debtors is very severely limited.

Essentially, there is a very big difference between loan sharks and legitimate adverse credit loan agencies. Though it may initially be difficult to determine which category a given company falls under, it is worth all the time and effort to do so.