To add to what has already been said, "loan sharks" (high interest, short term loans) are often just as happy to take whatever collateral you put up to secure the loan. $500 payday loan, 600% APR (not an exaggeration), and maybe you put your car note down as collateral. If you have a 30 day loan term and can't come up with the roughly $750 in a month, they just bought your car for $500.
HuchieLuchie t1_j254xd5 wrote
Reply to ELI5: Why you shouldn't borrow from loan sharks by Cold_Chemical5151
To add to what has already been said, "loan sharks" (high interest, short term loans) are often just as happy to take whatever collateral you put up to secure the loan. $500 payday loan, 600% APR (not an exaggeration), and maybe you put your car note down as collateral. If you have a 30 day loan term and can't come up with the roughly $750 in a month, they just bought your car for $500.