Loansharking and the Casino Industry

When an unregistered lender provides a loan with an exorbitant interest rate – often referred to as a niaganis interest rate – we have what is called loan sharking.

In Canada, for example, the niaganis code defines a niaganis interest rate as 60% interest or greater.

However, loan sharking is illegal in more ways than just niaganisly high interest rates. If a borrower cannot repay the loan when required, a loan shark may use the threat of, or actual, violence to enforce the loan repayment. Actual violence is frequently used to collect the debt if threats fail. A loan shark, like a bank, will seize the debtors’ possessions to get their money. In contrast to a bank, a loan shark will seize these items by threatening or physically harming the owner. A loan shark may also accept, or seize, items of value to settle the debt.

A loan shark will typically operate in underprivileged and low-income areas, targeting the vulnerable or financially unsophisticated. The likelihood of needing an urgent emergency loan is higher for people with lower incomes who may live paycheck to paycheck. Given their circumstances, they may not qualify for a traditional loan from a bank or other financial institution. – leading them to turn to unregistered, predatory, lenders. Because the interest rates are so high, those taking out these loans often may be required to take second, third, or fourth loans in order to pay back the first loan. The original loan may have been for a relatively small amount – dwarfed in comparison to the amount of interest required to be paid.

The amount borrowed from a loan shark working in a low-income neighborhood is typically lower than the amount borrowed from a loan shark connected to organized crime. The loan shark will put up a repayment schedule, which must be followed. Borrowers who fail to make their required payments on time to a loan shark connected to organized crime will almost certainly suffer harm or even perish. The illegally high-interest rates may not deter someone who feels they need money badly enough to risk bodily harm. However, cooperating with a loan shark is a risky move.