loansharking

Loansharking refers to the practice of lending money at illegally high interest rates, typically well above legal usury limits and without proper licensing or regulatory oversight. The term is often associated with informal lenders who aggressively collect debts and may employ intimidation or threats to secure repayment. While some jurisdictions distinguish between licensed payday or consumer lenders and illegal loan sharks, loansharking as a practice centers on exploiting borrowers through excessive costs and coercive collection methods.

Operations commonly involve quick access to cash with few questions, followed by harsh terms such as exorbitant annual percentage rates, hidden fees, and frequent, short repayment intervals. Collateral or personal information may be used to pressure borrowers. Default can trigger aggressive collection tactics, including harassment, threats of violence, or asset seizure. Because the lending is illegal or unregulated, borrowers may have limited avenues for redress if harmed or overcharged.

Legal status varies by country and region, but many places classify unlicensed lending, excessive usury, and coercive collection as criminal offenses or civil violations. Authorities may pursue criminal charges against lenders and provide remedies for victims, such as debt relief or restitution. Efforts to curb loansharking often involve stronger enforcement of usury and licensing laws, public awareness campaigns, and support services for debt counseling.

Individuals can reduce risk by dealing only with licensed lenders, seeking financial education, and contacting consumer protection agencies or law enforcement if they encounter coercive or illegal lending practices.