Why borrow from loan sharks ?
If those people have a choice, they would not want to borrow money from those Ah long’s (loan sharks).
They need money urgently and the banks are not lending them because they do not have the right criteria to qualify for loans.
Those banks would need collateral’s like a house or land tittles in order to secure a loan.
In the present day , it is easy to apply for a credit card and the banks literary send you one even if you do not apply for it.
Credit cards are a very good source of income for those banks because of the hidden costs (late payments fee’s, annual fee’s)and 18% interest P.A .This would make those banks the officially sanctioned licensed ‘Ah Long’s ‘
Where can they go or turn to ,if they want to borrow money ?
If the banks do not want to lend them because they do not have any collateral’s , they could go to those pawn shops or money lenders if they have gold ornaments to act as a deposit.
They could seek out their friends or relatives but there is a limit on how much those friends and relatives can lend . Moreover for some people to let others know about their financial predicaments is shameful (No face).
It is when they do not have any collateral’s , or gold ornaments, or willing friends or relatives ,they will seek the services of those Ah Long’s.
Since it is an unsecured loan , the Ah Long’s can charge very high interests for their loans.
Those who want to borrow money to tight over a situation can be from any levels of the society.
It could be from the rich to the very poor in the society. The majority of borrowers are from the middle class as the poor are too poor and those Ah Long’s will not lend to them.
In Malaysia, you can see the Ah Long’s hanging their banners or posters advertising their services with only their contact numbers and no address as it is illegal to lend money without a license.
They have migrated from sticking their name cards on telephone poles and walls of buildings.
There are many reasons why people want to borrow money from those Ah Long’s.
Some are die hard gamblers who lose their bets and need to repay their winners.Some businessmen need money to cover their postdated cheques which are due.Some need the money for emergencies due to sickness or accidents.
If you are a die hard gambler, it is difficult to kick the habit and you are at the mercies of those Ah Long’s.
For those businessmen , it would be better to arrange with those debtors to settle those cheques which are due.
Borrowing from those Ah Long’s will only increase your cost . Those business debtors are understanding as they do not want to be harsh and will allow you more time to pay up.
You will save a lot from those high interest charged by those Ah long’s.
If you borrow from those Ah Long’s to pay your debtors, you are only stupid.
Those who borrow from those Ah Long’s because of an emergency, make sure that you can pay them back. Otherwise , you will be hounded and your life would be like hell.
There is another way you can borrow from the banks if you have those credit cards. If you need a short term loan , you can always use the cash advance facility and if you want to max out your card, you can go to those companies that will arrange the loan from the banks and you can pay back by installments in two or three years time.
Those companies will swipe your card for electrical goods but you get cash after paying for the bank commissions and their agent’s commissions. it can be a one time upfront 18% to 20% flat for the three years loan. it is not expensive and better than Ah Long’s.
Live within your means and cut your clothes according to your size. I rather be poor and happy than to appear rich but with mountain of debts.