How to avoid loan sharks
Getting a loan is not a bad idea. But getting it from loan sharks can become a regret. Nobody wants to get money from loan sharks, but some situations leave you with no choice. If you don’t want to end up in such situations, this article is a must read for you.
There have been several reports of individuals borrowing money from loan sharks being threatened or even locked up by these loan sharks.
One of the means of credit recovery imagined by these loan sharks is the sending of unsolicited messages to the contacts of their borrowers. They do this in order to prevent these people from repaying the loans.
So that you do not fall victim to loan sharks, here are the steps you can follow.
1. Have a savings plan
The culture of savings is eroding in today’s world. You see individuals eating into their resources with their 10 fingers. Some people don’t even see the need to save. They prefer to spend everything they have now without a savings plan. When asked, they give the excuse “YOLO”, i.e. “You only live once”.
The fact that you only have one chance to live should be a valid reason for you to save up and not do otherwise. Unexpected times come in life and in order not to be stuck at this time, you need to cultivate a good saving habit.
Saving as little as 10% of your income will largely save you from loan sharks, because small drops of water form an ocean.
You can read on effective savings strategies
2. Have a budget and never exceed it
People have sometimes had to resort to loan sharks due to a lack of financial discipline. For any event or thing you want to do, always have a budget. Having a budget will help you channel your resources only towards important things.
Beyond having a budget, you also have to stick to it. Never exceed your budget. Be content and disciplined enough to stick to your budget. Avoid the pressure to go over budget as this self-discipline will keep you from being at the mercy of loan sharks.
3. Don’t buy on credit
No one is immune to the urge to get things on credit, but financial discipline and contentment are what separate those who will fall into the moneylender’s trap and those who will not.
Instead of buying things on credit why not pay in advance or pay in chunks and get your item when you are done paying.
4. Resist the urge to borrow
The fact that there are moneylenders in society does not mean that you have to borrow. If you do things within your means, you won’t need to borrow. The nation’s current economic situation should be reason enough to discourage you from borrowing.
It used to be that you were told to cut your coat according to your size. In today’s world, you cut it according to the material available. So if it’s not important or your life is not in danger, resist the urge to borrow.
5. Borrow from microfinance banks, registered financial institutions
If there is a justifiable reason to borrow, such as for business purposes, borrow only from registered financial institutions, preferably commercial banks or microfinance companies.
Consider borrowing from commercial banks or microfinance companies rather than loan sharks for the following reasons:
- Microfinance companies or commercial banks have loan structures
- They often have a clear repayment plan
- You have the guarantee that the money you borrow does not come from criminal activities
- Considerable interest rates
- Your transaction is framed by a clear agreement supported by documents.
You can verify list of microfinance banks in nigeria
6. Avoid an extravagant lifestyle
A key to avoiding loan sharks is to avoid an extravagant lifestyle. Some people want to impress and show off to people who care less about them.
Some people, especially young people, want to use the latest smartphones, latest cars, jewelry, shoes, clothes, etc., without a corresponding income that can accommodate their extravagant lifestyle.
You can live a simple yet comfortable life if only you decide to live within your means and not above it. Also, avoid the urge to live like your favorite celebrity because they won’t be there to save you when the loan sharks come for their money.
You can read how to break seven common bad money habits
7. Don’t give in to undue financial pressure
Finally, to avoid loan sharks, avoid undue external pressure. Avoid pressure from friends, parents, spouses, children who can lead you to take out a loan that is not necessary. Do not do because of a one-day event or to please others take out a loan that you will spend the rest of your life paying.
Most of the points discussed above in this article boil down to self discipline in your finances as an individual. It is possible to avoid loan sharks only if you intend to cut your coat according to the material available.
One word they say is enough for the wise!
IN CASE YOU MISSED THESE FROM NIGERIAN TRIBUNE