WHY LOAN SHARKS ARE VERY BAD
Some loan sharks have attempted tried to charge interest rates as high as 6%:
Loan sharks will start out very friendly. And if you comply with your payments they will remain friendly. But the reality is, even if you do, any loan you request will come with a high interest rate.
There are many risks, loan sharks, apply to authorized loans.
•You pay far more in interest than you would through any legal borrowing.
•You may be harassed if you have late payments.
•You are often pressured in borrowing more money to cover one debt with another.
HOW TO RECOGNIZE A LOAN SHARK
A loan shark may:
•offer little or no paperwork, such as a license, credit agreement or record of payments
•increase the debt or add additional amounts to it without your permission
•neglect information, such as the interest rate or how much you still owe
•take items as security, such as passports, bank cards or driving license
•not allow you to settle your debt, or
•get nasty – they may resort to intimidation, threats or violence
HOW TO RECOGNIZE A LENDER IS LEGITIMATE
The Central Bank of Aruba is the legal institution to register licensed lenders, as well as everyone who has applied for a license or has had one taken away or suspended. If a lender isn't registered as having a current license, don't lend money from them and doesn’t allow them access to your home.
Credit Reports Benefit Lenders
•A credit report is a collection of detailed information compiled by BKR Aruba to aid in the evaluation of a lender's decisions regarding making loans to the individuals about whom the reports are compiled. The type of information contained in these reports includes personal information, credit history and records of previous credit defaults. By registering the collection of this information at BKR Aruba, lenders receive many benefits.
Different Sources of Financial Information
•Benefit of a credit report to a lender is simply to be able to turn to one source for a collection of various type of information. Rather than being forced to inquire into a potential borrower's potentially extensive credit history, a lender can register this task at BKR Aruba, thereby freeing up resources to focus on other activities.
Evaluating the Likelihood of Defaulting
•One of the principal uses of a credit report is to assist a lender in evaluating the likelihood that a potential borrower will default on his loan. A previous declaration of overexposure, for example, would likely be seen as evidence of the riskiness of a particular loan. Lenders benefit from this information because it decreases the possibility of not having payments on the loan.