In extreme circumstances, people may turn to loan sharks for their financial needs, despite the risks and the often unfair arrangements. Loan sharks are known to charge up to 40% interest, confiscate important documents and ATM cards, and operate by threatening the individual and their loved ones should they miss a payment. So why do people borrow from them?
For one, borrowing money from a loan shark is easy. They generally do not reject people. Secondly, loaning from them is convenient: they don’t do credit checks nor require numerous documents from employees. And finally, transactions are usually quick and approved immediately. Employees can get the money as soon as they need it.
But borrowing money from loan sharks has stressful consequences that affect not just the employee, but also their immediate family and friends, and the company they work for.
That’s why it’s crucial for an employer to stop loan sharks from preying on their people.
The following steps might help:
`1. Educate employees about the dangers of borrowing money from loan sharks.
Help employees understand that turning to loan sharks for money can only further aggravate their financial situation. They can get them in serious trouble, especially because of:
- High interest rates
- High penalty fees, should they not pay on time
- Short payment terms
- Unethical practices that force employees to pay
Loan sharks contact friends, family, and co-workers to put pressure on the person to pay right away, which can be humiliating and stressful on the employee.
2. Help employee detect “legally-looking” loan sharks
Stop loan sharks from preying on your employees by pointing out the usual characteristics of loan sharks.
Key indications are
- They do not ask for documents or provide an agreement for the transaction
- They have hidden charges, like undisclosed penalty fees
- They have extremely high interest rates
- They only require you to pay in just a short period
Note that legal-looking lenders may be loan sharks in disguise. If your employees download a lending app, be sure to remind them of this real and risky possibility.
3. Educate them about government or private-led loan facilities that offer loans
Instead of relying on loan sharks, remind employees that government and private agencies can offer them loans for specific purposes like Pagibig and SSS. Why not organize a talk regarding this? This way, your employees will become more aware of the different avenues they can take should they need cash. However, there are considerations with government or private-led loans. They usually require documents and the loan may take time for approval and release. Hence, these may not be the best options in immediate and emergency situations.
4. Encourage employees to save
Of course, don’t forget to encourage your employees to save up for rainy days. Nothing beats being prepared for life’s unexpected events. Consider organizing a financial wellness class where employees can learn about insurance, budgeting, and the different ways to properly increase their savings.
5. Partner with Advance
Stop loan sharks and empower your employees by partnering with Advance PH, the biggest online salary loan provider in the market.
When your company partners with Advance PH, your employee can conveniently apply for a short-term loan in their individual dashboard upon enrollment. Employees can borrow up to 30%* of their monthly salary and have it deposited straight to their payroll account in as fast as two minutes.
We make the payment process convenient through monthly salary deduction.
Stop Loan Sharks from Preying on Your Employees
To help your employees, educate them about loan sharks and the consequences of engaging with them, and show them legal ways to borrow money. Encourage them to budget, save, and partner with Advance PH for fast and convenient cash advance loans.
For more information, visit www.advance.ph. You may email inquiries to partner@advance.ph.
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