Learn how to protect yourself from loan sharks and avoid debt traps. Borrow safely from legitimate lenders like BDO and BDO Network Bank
Based on the latest Social Weather Survey (SWS) conducted from September 14-23, 2024, around 59% of Filipino households, approximately 16.3 million families, consider themselves poor. This marks a slight rise from the 58% recorded in June.*
The survey highlights the ongoing financial challenges many Filipinos face, with some being forced to borrow money to make ends meet. Unfortunately, not all lenders operate fairly. Some, known as loan sharks, exploit people in desperate situations, trapping them in cycles of debt that are difficult to escape.
Understanding Loan Sharks
Loan sharks are illegal lenders who target vulnerable individuals, such as small business owners or vendors in public markets who need financing to keep their businesses afloat.
Known for schemes like the infamous 5-6 lending practice, these lenders offer quick loans without regard for the borrower’s ability to repay. However, their loans come with incredibly high interest rates and harsh repayment terms, leading borrowers into deeper financial trouble.
Recognizing the signs of a loan shark is crucial for protecting yourself from their predatory practices.
Red Flags of Loan Sharks
To avoid falling into the trap of a loan shark, keep an eye out for these warning signs:
- Pressure to Act Quickly: If a lender tries to rush you into making a decision or insists that you must accept the loan immediately, be cautious. Legitimate lenders give you time to consider your options.
- Lack of Transparency: If the loan terms are unclear or if the lender refuses to provide written documentation, consider it a major red flag. Always get a written agreement outlining the loan’s terms.
- No Credit Check: Be wary of lenders who don’t assess your ability to repay. Legitimate lenders will check your credit history as part of responsible lending practices.
- Unlicensed Operations: If lenders aren’t licensed, they are likely loan sharks. Legitimate lending institutions are regulated by government authorities, such as the Securities and Exchange Commission or the Bangko Sentral ng Pilipinas (BSP).
- Excessive Fees: If the fees or interest rates seem unreasonable, you’re likely dealing with a predatory lender.
Safe Borrowing Tips
To ensure you’re borrowing safely, consider these tips:
- Choose Reputable Lenders: Stick to well-known banks and licensed lending institutions regulated by the Bangko Sentral ng Pilipinas (BSP). They generally offer fair and transparent loan terms.
- Read the Loan Agreement: Before signing, make sure you understand the interest rates, fees, repayment schedule, and all other terms of the loan.
- Be Cautious of Unsolicited Offers: Loan sharks often reach out to potential victims through unsolicited texts or emails. Legitimate lenders don’t operate this way, so it’s best to ignore such offers.
- Explore Alternatives: Before borrowing from unknown sources, consider borrowing from family or friends. This could provide the financial support you need without the risks tied to loan sharks.
- Know Your Rights: As a borrower, you have rights, including privacy and respectful treatment during debt collection. The Securities and Exchange Commission (SEC) and the BSP regulate lending companies and ensure borrowers’ rights are upheld.
Borrow Responsibly
While borrowing can provide temporary relief, it’s crucial to do so responsibly. Make sure to repay what you owe, regardless of whether you borrowed from a legitimate lender or not.
Falling into the trap of a loan shark can be dangerous, leading to a cycle of debt that is incredibly difficult to escape. Worse still, failure to repay may result in harassment or threats.
Always take the time to carefully evaluate your borrowing options to avoid the long-term consequences of borrowing from illegal lenders.
Visit Banco De Oro (BDO) or BDO Network Bank (BDONB) for your loan needs
Looking for a reliable loan option? Whether you’re planning to finance a home project or take that dream vacation, BDO has you covered.
If you’re looking to grow your small business or need a personal loan, visit any BDO Network Bank branch near you. The requirements are straightforward, and you can enjoy low-interest rates.
Click these links to learn more about the bank’s products and services:
Banco de Oro https://www.bdo.com.ph/
BDO Network Bank https://www.bdonetworkbank.com.ph/
*Reference: https://news.abs-cbn.com/news/2024/5/1/more-filipino-families-go-hungry-in-1st-quarter-of-2024-sws-1829
I didn’t realize how dangerous loan sharks could be and how easy is to fall into their traps when you are feeling desperate! Thanks for your tips!
Loan sharks aren’t just shady, back-alley guys, anymore. I have a friend who did one of those payday loans. It’s hard to believe those are legal!
I don’t have any personal experience with loan sharks, but I know they’re out there. A family friend ended up in some real trouble taking a loan out through a shady source.
Thanks for spotlighting those red flags. I almost thought they were just aggressive sales tactics.
Those are some great points to keep in mind. Haven’t experience borrowing from a loan shark before but I’ve seen enough movies and real life situations to know that they are something you avoid all together.
I am so glad that I read this article. I have been getting alot of loan shark requests lately. I must say it is very tempting, but I do control myself. Thank you so sharing.
Ugh, tried a loan from an app and i failed to pay on time once. Omg, the interest was a hundred a day! Talk about legal loan sharks! Never again.
Interesting article! I keep getting atleast 3 loan shark calls every day! Can you please suggest best resources for reporting loan shark activities safely?
Unfornately, I am in the Philippines. I suggest you report the phone number to a government agency in your country who regulates telecommunication business. I hope this helps.