Question from a reader:
Do loan sharks really exist? I want to know what they are like.

What You Should Know About Loan Sharks

Hello, readers. Today, I want to talk about the topic of “loan sharks.” Recently, many people have been hearing about their existence on television and the internet, and some may be curious. Therefore, I will explain the reality
of loan sharks from a legal perspective.

What is a Loan Shark?

First, let’s explain what a loan shark is, starting from the basics. A loan shark is a moneylender who engages in high-interest lending in violation of the law. Formally, they are referred to as “unregistered operators,” and because they operate without registering with the Financial Services Agency, they cannot be considered legitimate operators. The interest rates they set and their collection methods are extremely harsh, often far exceeding legal interest rates. As someone studying law, I have a strong interest in the existence of these unregistered operators. This is because, while they are clearly illegal from a legal standpoint, many people actually fall into their traps.

The Reality of Loan Sharks

Now, let’s look at some specific examples of how loan sharks operate. One day, a friend of mine was troubled by sudden expenses. Seeking to borrow several tens of thousands of yen, my friend was drawn in by keywords like “same-day loan” and “low interest” on social media, believing it would be easy to borrow from a loan shark. What was the outcome? Initially, my friend borrowed a small amount and repaid it as promised. However, as the amount borrowed increased, the repayment amount skyrocketed. Ultimately, my friend’s debt reached several hundred thousand yen, leading to days filled with fear of collection. Indeed, loan sharks slowly corner people from behind the scenes.

Loan Sharks from a Legal Perspective

Let’s return to the legal perspective. In Japan, moneylenders must operate under the “Money Lending Business Act.” This law sets a cap on lending interest rates and requires proper procedures to be followed. However, loan sharks ignore this and set exorbitant interest rates. Specifically, the legal interest rate is around 15-20% per annum, but loan sharks often exceed this easily. It is not uncommon for them to set rates exceeding 100% per annum, causing borrowers to suffer not only from the principal but also from inflated interest. This is a complete violation of the law and goes against the rules set by the government.

Collection Methods and Their Impact

Now, let’s touch on the collection methods used by loan sharks. A reasonable person would feel that lending at exorbitant interest rates is ethically problematic. However, loan shark operators, even knowing this, employ methods to corner borrowers. Acts such as threats, violence, and even harassment towards family or workplaces may occur, which are legally and socially unacceptable. I have a story from an acquaintance who experienced this firsthand; he was unable to repay his debt and was threatened by a loan shark with, “Next, I’ll contact your family.” He subsequently became mentally distressed, which affected his work. This is the terrifying aspect of loan sharks, where it is not just a matter of money.

How to Escape from Loan Sharks

So, what should you do if you or someone around you gets involved with loan sharks? First and foremost, it is important to stay calm. In a rush to repay, one might end up accumulating more debt. Next, I strongly recommend consulting with a professional. By consulting with legal experts or consumer organizations, you can receive appropriate advice. Additionally, there are now more organizations and apps aimed at eradicating loan sharks. By utilizing these resources, you can obtain information and seek help. A friend of mine was able to successfully escape from loan sharks by consulting with a professional. His words, “By consulting, I found a path I had never seen before,” still resonate with me.

A Concluding Message

Finally, I want to summarize my thoughts on loan sharks. Indeed, borrowing money can be easy, and repayment can become difficult. However, getting involved with loan sharks must be absolutely avoided. Even if it seems like a temporary solution, a deep darkness awaits. Acquiring legal knowledge and having accurate information about debt will be extremely important in your future life. To protect yourself and your loved ones, always maintain your composure and take appropriate actions. Spread knowledge about loan sharks and seek professional help when necessary. I believe that this is the best strategy to escape from loan sharks.