02.02.2022

How to Spot (and Avoid!) Loan Sharks

Loans have always been a part of our lives. There are lots of options to choose from, and there are lots of lenders who are willing to extend a helping hand in times of need.

But what if a lender does not have your best interests in mind, instead offering you unreasonable loan terms at the expense of your budget and your peace of mind?

That’s what we call a loan shark. And just like their underwater counterparts, they wait for the perfect opportunity to take advantage of you and bleed you dry.

What is a loan shark?

A loan shark is a person or company that offers loans at very high interest rates and uses blackmail and threats to collect debts. The most common examples of a loan shark are 5-6 lenders and sangla ATM lenders.

They sneak in hidden charges and have short repayment periods, making it hard for a borrower to come up with enough funds to repay their loan.

These lenders usually prey on borrowers who are desperate, have low or no financial literacy, or have been rejected by formal lenders.

Loan sharks are everywhere, lurking within neighborhoods and online spaces.

How do you spot a loan shark?

1. Loan sharks have very high interest rates

Loan sharks have ridiculously high interest rates, sometimes even higher than what banks and other private lenders offer.

As a result, borrowers would have to pay large fees on top of the principal amount every repayment period.

2. Loan sharks have no background checks

Loan sharks do not need to conduct a background check on you because they already rely on predatory practices in order to get the money back.

There’s no need for them to check your credit standing or income anymore when their astronomically high rates and fees are already set in stone.

3. Loan sharks have hidden and excessive charges

Loan sharks may impose hidden fees on borrowers. They may also include excessive charges like document prep fees into the loan.

Loan sharks take advantage of having no contracts to sneak in these fees, often without the prior knowledge of borrowers.

And speaking of contracts…

4. Loan sharks don’t offer formal contracts

Loan sharks provide no written contract or document that formally specifies the terms and conditions of a loan. This makes it possible for them to charge borrowers high interest rates and other fees.

Without a formal or legally-binding contract, it is difficult for borrowers to go after loan sharks or file a complaint against them. Kung meron mang kontrata, basahin mabuti ang nakalagay at huwag basta pumirma.

5. Some require ATM card/s as collateral

Not all loan sharks do this, but lenders who offer sangla ATM loans require their borrowers to hand over their ATM card/s as collateral for a loan.

They would also require the borrower to share their ATM card PIN and other bank information.

Using an ATM card as collateral is not illegal per se, but the Bangko Sentral ng Pilipinas has warned borrowers against sangla ATM lenders. According to the central bank, this scheme puts borrowers at risk of identity theft, scams and unauthorized bank withdrawals.

6. Loan sharks have unethical debt collection practices

Perhaps the most dangerous aspect of a loan shark is their tendency to resort to unfair debt collection practices, sometimes bordering on abusive.

It is not uncommon for money lenders to go to a borrower’s home or workplace to collect unpaid debt. Loan sharks however, use threats, blackmail, or violence at the expense of a borrower’s privacy and peace of mind.

Nowadays, loan sharks turn to SMS and social media to “shame” defaulting borrowers, sending out messages that implore close contacts to pressure a borrower into repaying a debt.

How do you avoid a loan shark?

  • Only take loans from banks, the government or licensed private lenders. Check the legitimacy of the lending institution and their history with other borrowers.

  • Keep record of transactions. Ilabas ang resibo! Receipts are a way to protect yourself from institutions claiming “you have not paid your loan”. This way, you have proof to show them when things don’t go well.

  • NEVER EVER borrow money with your ATM card/s as collateral. Aside from putting you at risk of identity theft, sangla ATM lenders can also make unauthorized bank transactions using your card and empty your bank account in a snap.


Dealing with a loan shark can definitely be a traumatic experience, but keep in mind that not all lenders are predatory. Some lenders still transact with borrowers’ needs as the main priority.

Here at UnaCash, we can guarantee a pleasant and legitimate experience! With our flexible loan terms, you don’t have to worry about not being able to repay your loan on time.

NO predatory interest rates, NO hidden charges, NO collaterals, and no need to worry about privacy intrusions!

Download the app and apply for a loan NOW!

More articles