The financial products market has always been attractive to those who wish to be part of it and enjoy its monetary benefits.
Usually, people think that becoming a loan Shark will help them generate a lot of extra income, and it can be, if you know how to manage interest, however, there is a lot that must be considered first.
This article will allow you to know certain information, throughout this small guide we will tell you everything you need to know about how to be a Loan Shark.
Lending money can be a business?
Yes. Starting a business as a money loan Shark is a very lucrative idea. This is as long as you have the initial capital to start operations.
However, currently through online financial platforms, people can become leaders. The platforms offer in exchange interest or commissions generated, which will depend on the amount you grant.
What benefits do these online financial platforms offer?
First, you become an investment partner of the financial platform, to which you decide to deliver your money.
In addition, this type of technology allows you to choose the type of person you want to use your money with, which gives you some peace of mind.
The investment processes are usually quite simple and completely online for the convenience of the person who grants the money.
Finally, your money will be insured by the means that the financial institution has to recover the borrowed money.
Requirements to be a Loan Shark
- Have the necessary capital to be able to offer loans or make investments.
- Be up to date with all regulations and laws that apply to private loan Sharks.
- Be of legal age and reside legally in Mexico.
- Adhere to interest rates set by government agencies.
- Extend payment guarantee documents so that all operations are carried out without problems.
Being a loan shark is illegal and a crime?
No. The business of lending money will never be illegal. However, there are some guidelines that everyone must follow to carry out this commercial activity without any problem with the Law. Among them: Every person must use their capital to carry out transactions and not the money of their clients or third parties.
Pyramid-type scams have been known, which are used as a type of loan between individuals. This form of loan is not well seen by governments.
If your case is that you need money, the recommendation is that you first go to people you trust such as family, friends, or recognized and regulated financial entities to have access to a loan.
How to lend money legally?
The main thing is to adhere to the laws applied to financial operations of this type. Between them:
- All-natural or legal person documents must be in order.
- Your loan and collection processes must adhere to the standards dictated by the government. You must also offer your clients contracts or other financial documents that serve as insurance for both parties.
- Charge interest rates that are approved by the government. Otherwise, you can be sued for the crime of usury.
- Check your client’s credit history in the credit bureau or circle. Remember that this information is public.
- Use consistent and convenient terms to recover your money.
Lending money online or crowdlending
In Mexico, there are platforms such as Afluenta that work under the principle of collaborative finance. That is, in them, natural persons become part of groups of investors that grant the capital that another individual needs to cover their financial needs.
These platforms offer in exchange for a percentage of interest that generates periodic profits while the debt is active. The value generated by the debt, that is, part of the interest is returned to the investor, apart from the money he has lent.
There are also crowdlending pages in which several people come together to lend money to someone who usually needs liquidity to start a business. For example:
YoTePresto: a Fintech, whose objective is to make loans to the community through crowdlending. It is considered one of the best platforms to invest in Mexico. It has more than 600,000 registered users and only 3% of its overdue portfolio. As for profitability, it has rates that range between 8%-38%; with an average profitability of 20%. Although the terms are variable, they have an average of 36 months, with a risk that will depend on the profile of the applicant.
Documents to lend money with collateral
For you to lend money safely, for you too, seek the advice of expert lawyers in the field. Surely they, among other things, will recommend standardizing the issuance of a money loan contract between individuals. With this, you reduce the risk of being scammed because you have a guarantee with which you can file a complaint.
Some money loan Sharks choose to issue documents such as promissory notes or bills of exchange. They specify the conditions of the negotiation and both parties undertake to fulfill their obligations.
Interest is profitable when it accumulates
In the sciences of economics, interest is an index used to measure profitability. It is applied in savings, investments, and credits. This is expressed as a percentage referred to as the total investment or credit.
This cash number is what is charged for something borrowed, usually money, in a given period. If you are going to lend, the person who agrees to the contract must pay for the loan. This is how, in the accumulation of several contracts depending on the agreed interest, profits are obtained and it becomes lucrative for the Loan Shark.
How much interest should I charge to lend money?
You should always adhere to the laws of the country. Otherwise, you will enter the category where being a Loan Shark is a crime because usury is committed.
Normally, people go to loan Sharks that offer low interest on the requested amount. With this, you generate trust and many more contracts in your favor.
When is it convenient to lend money and when not?
It is convenient to lend money when all the basic statutes are met to ensure a positive experience for all parties involved.
Also, you should lend money only when the client meets the basic requirements and demonstrates that he can afford the loan payments.
Do not lend money when there are irregularities in the transaction or when dealing with a person with a bad credit history. Nor do you lend money to swindle or get more out of the activity. Remember that you can be reported.