First things first, it’s important to let go of any prior notions that you might have of legal money lenders and loan sharks simply because the two are considerably worlds apart. While legal money lenders operate by complying to guidelines enforced by the Ministry of Law, loan sharks tend to violate and breach rules on their own accord. In the past, due to social problems that came about as a result of the dubious nature of loan shark businesses (many of which we all know too well), the government made way for a governing body to regulate a new industry of legal money lenders in an effort to protect the rights and interests of loan borrowers. This way, there are standards to be met when operating a money lending business or penalties/legal consequences will be imposed upon the money lender.

In a wage to differentiate the two, here are some factors of comparison to consider to aid you in your financial decisions:

Loan Process

There is no denying that the process of taking out a loan from a bank involves a whole lot of tedious paperwork and credit history checks—which is exactly why in times of need and desperation, people who need cash urgently are driven to loan sharks who will then exploit this to their own advantage. Knowing very well that such individuals have no one else to turn to and are in dire need of cash, these loan sharks will mark up their interest rates significantly for their own benefit. Legal money lenders are often overlooked at this point, who, despite being obliged to look into one’s credit history, are more tolerant of low credit scores and will indefinitely protect the borrower’s interest through a contract written in black and white.

Interest Rate

When it comes to doing business with a legal money lender, there are specific interest rates that are already set by the government which the money lender has to abide to. The same, however cannot be said about loan sharks who are not bound to a legal authority so expect changing rates and conditions any time during the term of your loan. With no contracts or paper trails in place, it’s no surprise if your repayment amount starts to snowball when sealing a deal with a loan shark.


If you are not ready to deal with unpleasant intimidation tactics or be aggressively chased down by loan sharks, perhaps turning to a legal money lender might a be a far wiser option, especially if you seek a good night sleep. Expect a strictly professional service from a legal money lender who will assist you to overcome any problems that you might face. In any case that you are unable to make your repayments according to the designated terms and schedule, request for a proper consultation with a legal money lender instead of having to put up with threatening SMS threats from loan sharks.