loan-sharking

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noun loan-shark·ing \ ˈlōn-ˌshär-kiŋ \
Updated on: 26 Jul 2017

Definition of loan-sharking

:the practice of lending money at exorbitant rates of interest

First Known Use of loan-sharking

1914


Financial Definition of LOAN-SHARKING

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.

Why It Matters

Loan sharking is usually the province of organized crime or otherwise usurious lenders. At best, borrowing under such terms is not in a business's or individual's long term best interest.  At its worst, such borrowing can be dangerous.


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