Many Hispanics living in the United States have difficulty accessing bank credit. If you apply for a loan with a bank, you may be turned down because:

1. You do not yet have a credit history in the US.
2. You have had financial difficulties in the past and your credit has suffered

If you dream of owning a home, buying a car, or starting your own business, it will be difficult and costly to achieve these goals without establishing and maintaining strong credit. Because this takes time and good financial practices, many Hispanics find immediate help from a loan shark.

What is a usurer?

When you’re looking for money, you may hear from people you know: “I know this person who lends money and doesn’t even ask for papers.” This person “lending money” could be a friend of a friend, someone who is a friend of the family, or could even be at a store in your neighborhood. There are many downsides to using the services of a loan shark, even though many claim to be legitimate lenders.

• They charge weekly interest rates. What is the real cost of loans from a loan shark? The lender will give you a weekly interest rate instead of an annual one. Remember that bank loans and other financial institutions always use annual interest. Let’s look at a typical case: The lender gives you $1,000 and you agree to pay 5% weekly interest on this amount. 5% each week translates to about 20% each month, and if you multiply that by 12 months in the year, you have an annual interest rate of 260%!
• Payments are confusing: Weekly interest rates that don’t seem that high can translate to up to 10, 20, and 30 times more interest than what you’d pay on a traditional loan agreement.
• Loans are difficult to pay. In fact, they are designed to be nearly impossible to afford. Many people who have taken out loans from these lenders end up losing more than they originally invested. If you can’t pay, the lender may constantly harass you or even threaten you with violence. Many people who borrow money from loan sharks lose their businesses.
• They don’t report to the credit bureaus: Loan sharks sometimes don’t report their loans to the credit bureaus. To establish, protect, and maintain your credit history, you must ensure that your creditors report your loans to the credit bureaus. If they don’t, there is no official record of your loan payments.
• They don’t operate within regulations: If you have a complaint, you have nowhere to go because loan sharks don’t have to comply with the regulations put in place to protect you as a consumer.

In general, it is best to avoid these types of lenders at all costs. If you need money for your business or for an emergency and don’t have access to a bank loan, try getting loans from ACCION, a nonprofit organization that makes business and personal loans and reports to the three major credit bureaus. .