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What is a loan shark?

Learn how these illegal lenders work and what the alternatives are.

Borrowing from a loan shark might feel like your only option when you’re in a pinch and need cash fast. These illegal lenders have few requirements and can seem easier than going to a legit lender. But there are safer alternatives out there — especially if you’re a member of a credit union or live in a state where payday loans are legal.

What is a loan shark?

A loan shark is an unlicensed lender who charges interest rates and fees that are higher than the legal limits set by the state. They typically have less favorable terms than legitimate lenders and aggressive debt collection practices if you can’t repay on time.
Traditionally, you could find them at local businesses or through word of mouth. Now, you can also find them online. They typically target borrowers from low-income areas, especially those facing a financial emergency.

How do loan sharks work?

Loan sharks work by providing money you have to pay back by a fixed date, either in full or through installments. They don’t have the same requirements as legitimate lenders: There’s no credit check or income requirement, and you don’t need a bank account. They also typically don’t care if you’re undocumented. Some might ask for collateral — like an ATM card, driver’s license or passport.
For their service, loan sharks charge extremely high interest rates, even compared to payday lenders. They also provide larger amounts than legally allowed for such short terms, which translates into sky-high repayments and less room to come up with the cash.
If you can’t pay it back, many loan sharks tack on aggressive fees or raise the interest rates. Others will keep any collateral you provided.

Can I find a legitimate loan shark?

No. By definition, loan sharks are illegitimate. However, there are legitimate short-term lenders that have similarly flexible eligibility criteria and offer financing at rates that meet legal requirements in your state.
Many short-term lenders will work with all credit types and are flexible about where you receive your income. You can sometimes get a payday or auto title loan that will provide funds in cash if you don’t have a bank account. If you need more than a payday lender can legally offer, installment lenders often offer loans up to $5,000.

Where can I find a loan shark online?

It’s possible to find a loan shark on online forums like Reddit, 4chan, 8chan or even Quora. You can also find loan sharks offering cryptocurrency loans on crypto message boards and forums. But the cost and risk of borrowing from a loan shark isn’t worth it, especially when there are plenty of legitimate alternatives out there.

Loan sharks vs. payday lenders vs. tribal lenders

You might have heard of payday and tribal lenders referred to as loan sharks. But these are technically legitimate lenders, even if they can be extremely expensive.

  • Payday lenders. These short-term lenders offer small-dollar loans to bad-credit borrowers. They charge high fees — sometimes the equivalent of 700% APR — but they’re regulated by your state and the federal government.
  • Tribal lenders. Though they work like payday lenders, the main difference is they’re regulated by tribal law rather than the US government. This often means you’ll pay higher interest rates than you would with a payday lender — and have less recourse if you have a complaint.

Online alternatives to borrowing from a loan shark

If you need cash fast and don’t have the best credit, consider the following alternatives before borrowing from a loan shark. You can often apply for these online.

  • Payday alternative loans (PALs). Some federal credit unions offer loans from $200 to $1,000 with APRs capped at 28% to borrowers of all credit types.
  • Pay advance apps. Pay advance apps like Earnin allow you to cash out the salary you’ve already earned before payday swings through, often for a suggested donation.
  • Installment loans. Borrow between $500 and $5,000 with APRs typically from 100% to 300%, available to borrowers with bad credit or unconventional sources of income.
  • Payday loans. Get a loan of up to $500 and pay it back in full on your next payday. You typically pay around $10 or $15 per $100 borrowed, though it depends on where you live and if they’re even legal in your state.
  • Local bank and credit union loans. Look to your local financial institutions for small-dollar loans with more flexible eligibility criteria. Some only require your individual taxpayer identification number (ITIN) rather than your Social Security number, which can help undocumented workers get funding.

Compare legitimate short-term loans and alternatives

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Name Product Filter Values Loan amount Turnaround time Requirements
Chime SpotMe®
Not rated yet
Chime SpotMe®
Up to $200
Same day
Single qualifying $200 direct deposit into Chime checking account in the last 34 days.
Access fee-free overdrafts up to $200 when eligible. Plus get your paycheck up to 2 days early with direct deposit. See Chime terms and conditions.
Smart Advances
Not rated yet
Smart Advances
$100 to $20,000
As soon as one business day after loan closing
Have a regular income, 18+ years old, be a U.S. citizen with a valid SSN, have an open bank account, meet any additional requirements your lender may have
Smart Advances was designed to help you request the loan you need, for any reason.
Not rated yet
$20 to $250
3 to 4 days standard transfer. Same day with $3.99 express fee.
Not stated
Automatically monitor your spending plus access cash advances up to $100 at a time.
OppLoans Installment Loans
Finder Rating: 4.7 / 5: ★★★★★
OppLoans Installment Loans
$500 to $4,000
As soon as the same business day.
+18 years old, Receive paychecks through direct deposit, Meet minimum income requirements, Live in eligible state
Comes with the option to change your due date so you won’t fall behind on repayments.
Not rated yet
1 to 3 business days, or instant with a fee or Premium subscription
Bank account must have at least 60 days of activity, Balance must be above $0 and have an average minimum balance on pay day
Have up to $250 automatically deposited into your account — for a $9.99 membership fee.
Possible Finance Mobile Installment Loans
Up to $500
As fast as 1 business day
Checking account with 3+ months of banking history, $750+ monthly income, live in eligible state, ages 18+
Borrow up to $500 with just a few swipes — but only for residents of 21 states.
LendYou Short-term Loans
Finder Rating: 2.5 / 5: ★★★★★
LendYou Short-term Loans
$100 to $1,000
Same business day to 1 business day
$1,000+ monthly income, direct deposit, US citizen or permanent resident, ages 18+
Get offers from potential lenders in minutes by filling out just one online form.
MoneyLion Instacash advances
$250, $1000 with RoarMoney account
Up to 5 days or instant for a fee
Bank account must have at least 60 days of activity, show recurring deposits and must have a positive balance
Fee-free, interest-free cash advances up to $250.
Fast5kLoans Short-term Loans Connection Service
Finder Rating: 3.5 / 5: ★★★★★
Fast5kLoans Short-term Loans Connection Service
$100 to $35,000
As soon as the next business day
Regular source of income, Verifiable bank account, US citizen, Ages 18+
Get connected with multiple lenders you might qualify with — even if you have bad credit.
CashNetUSA Loan
Finder Rating: 3.6 / 5: ★★★★★
CashNetUSA Loan
Varies by state
As fast as same business day
Regular source of income, bank account, US citizen or permanent resident, age of majority in your state
Sign up for its discount program to get access to coupons and deals on everything from dining out to tax services.

Bottom line

Loan sharks might be appealing if you’ve had trouble qualifying for a loan in the past. But consider the alternatives first — you can likely find a safer option with more reasonable rates and terms.
You can learn more about how legitimate short-term lenders work with our guide to payday loans.

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