Financial Definition of LOAN-SHARKING
What It Is
Loan sharking refers to predatory lending practices by individuals or organizations that charge high interest rates.
How It Works
Loan sharking involves taking advantage of the borrower's weak credit or collateral condition. Typically, when a borrower has no option to secure a traditional bank loan, a loan shark does not usually require collateral for a loan, a bank account or even a written loan agreement. While this may sound good, at first, a loan shark will charge very high interest on the loan, which makes it very difficult to pay the loan back on time, or at all.
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