What is a loan shark?

A loan shark is someone who lends money to someone else with extremely high interest rates and unreasonable repayment terms. Loan sharks are illegal in Hawaii, as they operate outside of the law. In Hawaii, the maximum interest rate allowed for legally-binding contracts is 4%. Any loan interest rate above 4% is considered usury, and is illegal. Therefore, loan sharks often charge extortionate interest rates, typically in the triple digits, that can cause borrowers to become trapped in a cycle of debt. Loan sharks often prey on those who are desperate for quick cash, such as those suffering from poverty and/or low income, and can use aggressive tactics to threaten borrowers into repayment. However, the debtor is rarely protected under the law, and even if they can pay the loan back, they may not be able to escape the high interest. In Hawaii, it’s best to avoid loan sharks and other predatory lenders altogether. Instead, borrowers should seek out alternative sources of financial help from credible, non-profit organizations or reputable lenders.

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