Loan shark
From Wikipedia, the free encyclopedia
A loan shark is a person or body that offers illegal unsecured loans at high interest rates to individuals, often backed by blackmail or threats of violence. They provide credit to those who are not willing or are unable to obtain it from more respectable sources, usually because interest rates commensurate with the perceived risk are illegal.
In much of history, usury laws made loan sharks commonplace. Many moneylenders skirted between legal and extra-legal activity. In the western world in recent years, loan sharks have been a feature of the criminal underworld, but otherwise rare. Loan sharks are common in the Italian American Cosa Nostra and Triads in Hong Kong.
There are many registered and legal lenders that lend to people who cannot get loans from the most mainstream lenders, such as large banks. They often operate in cash, whereas mainstream lenders increasingly operate only electronically, which means that they will not deal with people who do not have a bank account. Terms such as subprime lending and "non-standard consumer credit" are used for this type of lender. Payday loans are one example of this type of consumer finance. The availability of these products has made true loan sharks rarer, though some authorised lenders have been accused of behaving in an exploitative manner.
Payday loan operations have also come under fire for charging inflated "service charges" for the service of cashing a "payday advance" — effectively a short-term (no more than one or two weeks) loan for which charges may run 3-5% of the principal amount. By claiming to be charging for the 'service' of cashing a paycheck, instead of merely charging interest for a short-term loan, laws which strictly regulate moneylending costs can be effectively bypassed.
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[edit] Yamikinyu in Japan
The regulation of moneylenders is typically much looser than that of banks. In Japan, Moneylending Control Law requires only registration in each prefecture. In Japan, as the decade-long depression lingers, banks are reluctant to spare money and regulation becomes tighter, illegal moneylending has become a social issue. Illegal moneylenders typically charge an interest of 30 or 50 percent in 10 days (in Japanese, these are called "to-san" ('to' meaning ten and 'san' meaning three) or "to-go" ('to' meaning ten and 'go' meaning five)), which is about 1800 percent per annum. This is against the law that sets the maximum interest rate at 29.2 percent. They usually do business with those who cannot get more money from banks, legitimate consumer loans, or credit cards.
[edit] Ah Long in Malaysia and Singapore
Ah Long (derived from Chinese word "Dragon" (Chinese: 阿龍) or short for the Cantonese phrase "daai ji lung", 大耳窿) is a term for illegal loan sharks in Malaysia and Singapore. They lend money to people who are unable to obtain loans from banks or other legal sources, mostly targeting habitual gamblers. They charge a very high interest rate (about 40% per month/fortnight which equals 1422%/33087% per annum due to the constantly compounding interest.)[citation needed] and frequently threaten violence (and administer it) towards those who fail to pay in time. [1] [2]
Many years ago, prior to the registration of mobile phone numbers in Malaysia, Ah Longs advertised their services merely by distributing their calling cards.
[edit] Red paint
When a person fails to pay in time, the Ah Long will spray, splash, or write in red paint on the walls of the house or property of that person as a threat of violence and to shame the borrower into repaying the loan. According to local police authorities, there have been cases where borrowers were beaten or had their property damaged or destroyed, and some victims have committed suicide. [1]
[edit] Pig head
Pig heads are sometimes hung outside the borrower's house, as a form of intimidation as well as a way of 'marking' the person as a loan 'defaulter'.
[edit] Stolen items
Nowadays instead of waiting for the victim to pay up, Ah Longs now tend to break into victim's house and steal items worth the loan. This method is commonly used to save time and also effort.[citation needed]
[edit] Identity banner display
Recent cases shows that Ah Longs also displays the borrower's identity card on a huge banner and post it on fences. Since Ah Longs only need the identity card from borrowers, this tactic is becoming common so that the borrower will feel humiliated due to public attention and will quickly pay up.
[edit] References
[edit] External links
- The money hole — an article about the loan shark problem in Japan.
- UK loan shark jailed
