Getting a loan is not a bad idea. But getting it from loan sharks can become a regret. No one desires to get money from loan sharks, but there are some situations that leave you with no choice. If you don’t want to get into such situations then this article is a must read for you.
There have been several reports of individuals who borrowed money from loan sharks getting threatened or even locked up by these loan sharks.
One of the loan recovery means devised by these loan sharks is sending of unsolicited messages to the contacts of their borrowers. They do this in a bid to frustrate these individuals to repay the loans.
In order for you not to fall victim of loan sharks below are steps you can take.
1. Have a savings plan
The culture of saving is eroding in today’s world. You see individuals who eat into their resources with their 10 fingers. Some individuals do not even see the need to save. They prefer spending all they have now without a savings plan. When asked, they give the “YOLO” excuse, that is, “You Only Live Once”.
The fact that you only have a single shot at life should be a germane reason for you to save and not to do otherwise. Unexpected moments come in life and in order for you not to be stranded at this period, you need to cultivate a good savings habit.
Saving as small as 10% of your income will in no small way save you from loan sharks as little drops of water makes an ocean.
You can read up on effective savings strategies
2. Have a budget and never go beyond it
People have had to go to loan sharks at times because of lack of financial discipline. For whatsoever event or thing you want to do, always have a budget. Having a budget will help channel your resources to important things only.
Beyond having a budget, you must also stick to it. Never go beyond your budget. Be content and disciplined enough to stick to your budget. Avoid the pressure of going beyond your budget as this self discipline will save you from being at the mercy of loan sharks.
3. Don’t buy on credit
No one is immune to the urge of getting things on credit but financial discipline and contentment is that which differentiate between those who will fall into the trap of loan sharks and those who would not.
Instead of buying things on credit, why not pay in advance or pay in bits and get your item when you’re done paying.
4. Resist the urge to borrow
The fact that there are money lenders in the society doesn’t mean you have to borrow. If you do things within your means then there will be no need to borrow. The present economic situation of the nation should be enough reason to discourage you from borrowing.
It was in times past that you are told to cut your coat according to your size. In today’s world you cut it according to the available material. So, if it’s not important or life threatening, 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, then borrow from registered financial institutions only, preferably commercial banks or microfinance firms.
Consider borrowing from commercial banks or microfinance firms rather than loan sharks forthe following reasons:
- Microfinance firms or commercial banks have loan structures
- They often have a clear repayment plan
- You’re guaranteed that the money you’re borrowing is not proceeds from crime based activities
- Considerable interest rates
- Your transaction is bounded by clear agreement backed up with documents.
You can check out list of microfinance banks in Nigeria
6. Avoid an extravagant lifestyle
A key to avoiding loan sharks is to avoid an extravagant lifestyle. Some individuals want to impress and show off to people who are less concerned about them.
Some individuals especially youths want to use the latest smartphones, latest cars, jewelleries, shoes, clothes, and so on without a corresponding income that is capable of accommodating their extravagant lifestyle.
You can live a simple but yet comfortable life if only you decide to live within and not above your means. Also, avoid the urge to live like your favourite celebrity because they will not be there to save you when the loan sharks come for their money.
You can read up 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 that can lead you into taking a loan that is not necessary. Do not because of one-day event or in order to please others take a loan you will spend the rest of your life paying.
Most of the points discussed above in this article boils down to self-discipline in your finance as an individual. It is possible to avoid loan sharks only if you are intentional about cutting your coat according to the available material.
A word they say is enough for the wise!
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