All About Loan Sharks in the Philippines

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Applying for money lending is a complicated process, supplemented by various essential procedures. Besides preparing the necessary documents, choosing the financial organization with suitable conditions, and analyzing your payability, you should be ready to deal with illegal crediting. Loan sharks occupy the dark side of the economic niche and have unacceptable conditions for giving credits. What is necessary to know before taking extra finances, and how to avoid illegal organizations in the Philippines? 

loan sharks in the philippines
loan sharks in the philippines

What should you know before a getting your personal loan in the Philippines?

What is a Loan Shark? 

Several establishments target people who can’t take money lending legally. They set up very high percentage rates and give short terms to return the finances. Such organizations are loan sharks, and their activities are spread worldwide.

The following characteristics refer to them: 

  • Usurers work with people who got refused at the legal establishments and offer abnormal repayment conditions. 
  • You can’t detect the criminal organization at first because they seem normal and don’t have objective signs of being a loan shark. 
  • They don’t have a website, which represents the legality of their activities and usually, work in person. 
  • The usurers persuade borrowers of the legality of their work and don’t reveal the actual activities. 
  • The process of knocking out the debts is rigid and breaks the law and moral rights. 

The status of loan sharks is illegal in the Philippines. If such an organization falls under the police or tax examination, it will be punished by law. Many citizens suffer from their activities every day, so it is essential to avoid scammers. 

How do Scammers Differ from Normal Financial Establishments?

The abnormal financing has tougher percentage installments, repayment rules, and general application terms. You may think that something is wrong at the first stages and think about finding another way to take out money lending.

The differential signs are the following: 

  • The interest rates are higher in the illegal companies when the regular organizations set up the interest rate considering the amount of borrowed money, the income, and other essential factors noted in the contract. 
  • Usurers may ask you to give your credit card, but it usually can’t be a deposit. 
  • They won’t give you any information about their previous financial operations to know if they were legal. 
  • The contract affirmation doesn’t refer to the sharks. They can give money only after taking personal information and knowing your essential data. 
  • The scammers may ask for paying a fee during the application, which rarely happens while taking money lending in normal establishments. 
  • The clients get regular threats even if the repayment time isn’t violated. 

If somebody gets scammed by illegal companies, he may ask for the police’s help. The scammers may use illegal (even life-threatening) methods to get their finances back. You should know about all the dangers behind the Philippines’ loan sharks’ activities. 

What are the alternatives to the payday loans in the Philippines?

How To Determine Illegal Financing? 

The objective properties help people avoid illegal organizations and keep their data and finances safe. Everyone who needs money lending should know them and share with others.

They are the following: 

  1. Loan sharks don’t have any paperwork while giving money. They want the borrowers to get less information about the loan to set up their terms after financing. Be careful if the representative gives money right after provision of a phone number, and address. 
  2. You won’t know the exact information about the interest rates. The sharks may say that they understand your condition and will give you finances with a few percent (but don’t say its number). 
  3. The usurers don’t use marketing strategies and set up public advertisements about their activities. They want to stay unnoticed and avoid regular police and tax checks. 
  4. They may also ask to give a deposit to confirm the procedure’s legality, and guarantee your repayment. You shouldn’t give the passport, driver’s license, or other documents if you think the organization is illegal. 
  5. The criminal organization will typically do everything to make you not repay the loan. For instance, after taking 500 PHP, you may give 2,000 back and remain to repay 3,000 more. 
  6. The sharks give the money in cash and to avoid making financial transfers. It is made to confuse the police and inspection bodies and keep their personalities unknown. 

When selecting the financial organization, choose its status at the Financial Conduct’s website. When choosing an establishment to borrow money, avoid the organizations with the listed parameters. If you fall under the scammers, you may end up with a loan that is impossible to repay.

Loan Sharks Legality Status in the Philippines

There is a misunderstanding about the fairness status of loan sharks, which they can use to persuade you.

Therefore, scammed people can contact the police because:

  • you don’t violate the law if you borrow the money from the organization with unfair terms. 
  • everybody who threatens your or your family’s life and health breaks the law.
  • the organizations who give you the money without signing a loan contract, telling you the interest rates, and having no license are illegal and will be punished. 

Several Republic regulation acts (№8556, №9474, №3765) control the activities of the loan organizations in the Philippines. The legal terms and rules are noted in the governmental documents. 

Tips to Avoid Scamming

Following several pieces of advice may help you get rid of scammers in your life and get additional financing without threatening your life.

Therefore, you should know about the following aspects: 

  • Don’t take money lendings in cash (use transfers or bank operations to receive extra financing). 
  • Don’t lead your life to the condition of taking additional financing (keep the savings and don’t waste money thoughtlessly). 
  • Borrow money only from reliable organizations. Search the information about legal organizations from the internet or ask your friends who used to take loans successfully. 

If you fall under scamming, you need to instantly report to the police or any social organization. Making it in short terms may help catch all the scammers and bring them to justice. 

Do you really need the loan at the moment?

Alternative Ways to Take Money Lendings

There are many ways to get extra financing in the Philippines.

They include the following: 

  • online companies: legal organizations provide different loans with convenient conditions. 
  • banks: if you need a significant amount of money, you may ask a reliable bank to take it with reasonable interest rates.
  • credit cards: it is a quick way to receive finances with the help of your bank’s mobile application or a procedure in the bank (if the amount of money is considerable). 
  • ATM: this type of loan requires having a debit card, allowing the borrower to take a necessary sum from the bank’s ATM. 

As we see, each of the listed ways to take loans is legal and doesn’t cause any threat to people. Choose the suitable method, determine its legality, and apply for money lending, if necessary. 

How is the Normal Interest Rate Counted?

Each company has specific rules to set the percentage rate. The regular formula includes the indicators of the loan amount, the time of giving money back, and other specific parameters. The monthly and yearly installments are counted with it, which helps avoid scamming and violating the contract conditions by the organization. 

Where To Borrow Money Online? 

Many organizations provide quick loans after uploading the necessary documentary package, confirming the understanding of terms and conditions, and contacting the operator. The repayment time and the interest rate are different in each organization.

The most popular companies are the following:

Each company has specific terms, which the borrowers should learn to avoid problems in repayment and make the application convenient. 


Overall, applying for a loan can cause abnormalities, such as dealing with loan sharks. They set up high percentage installments and make everything to place people in catastrophic conditions and don’t allow them to repay typically. The borrowers should know the objective characteristics of the scammers to avoid them and keep their data and even their life safe. Be careful, and if the scammers deceived you, report to the police.

User Review 4.33 (6 votes)
Linda Carters/ author of the article

Financial Journalist on Advance Loans Philippines with 8 years experience in a Fintech niche.

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