Are small loan lenders “loan sharks?” and other misconceptions

Are small loan lenders “loan sharks?” and other misconceptions

We’ve all seen the TV shows and movies where hapless character is threatened by goons if they “don’t come up with the money.” Many people associate small loan lenders and personal loan financiers with this kind of fiction. In this blog post, we’ll clear up some misconceptions about small cash loan lenders.

What is a “loan shark?”

A loan shark was a term that applied to “predatory lenders” in the 19th and early 20th centuries. The “shark” part of “loan shark” refers to the predatory approach of these lenders, preying on the vulnerable and desperate.
In 1920s and 1930s America, many of these “payday lenders” charged obscene interest rates and threatened people with violence if they didn’t pay up on time. Other times, the “semi-legitimate” lenders would clean out their “marks” by forcing them to sign legally binding contracts and sending them to court.
Usually, this kind of “loan sharking” was illicit and highly illegal.

Why payday loans and cash advances are different

As finance and credit markets matured in the latter half of the 20th century, so did consumer protection laws. It was made illegal to become a black-market “loan shark” and use predatory lending practices like the ones described above. Payday loans, cash advances and small cash loans are finance products like any other. Car loans, personal loans and home loans are all governed by rules and regulations that aim to protect consumers. Let’s say you’re looking for a car loan. A lender is required by law to give prospective borrowers a table of comparison rates for all the products they offer that vary by loan term, interest rate and fee structure.

In the same way people just can’t open up their own doctors’ office or law firm, financiers cannot simply open up shop and offer people loans. They need to be accredited by a financial governing body and be accountable to them at all times by letting them see their books and lending procedures.

Licenced, accountable and responsible is accredited to provide finance by the Australian Securities and Investments Commission (ASIC.) ASIC is an independent government body that regulates corporations, insurance contracts and national consumer credit protection laws in each state and territory of Australia. There are many, many laws regulating consumer credit products such as small loans, car loans and personal loans. All these laws are written to protect borrowers from all the pitfalls that real “loan sharks” used to trap people with. is bound by the conditions of its credit licence and works within ASIC’s strict provisions to make sure we are accountable to not only ASIC, but our customers. follows the strictest responsible lending practices. Unlike the “loan sharks” of old, we do not lend to people who we feel are not in a well-enough financial position to pay back the loan. We certainly don’t believe in making people worse off.

Unsure? Always ask to see their credit licence

If you ever hear the term “loan shark,” remember that the “bad old days” of getting personal credit are over. If you are ever unsure about taking out credit from a small loans provider, always ask to see the lender’s credit licence number or other accreditation. You can check for a company’s credit licence on ASIC’s MoneySmart website. is proud to be a responsible lender that gives customers all of the strictest consumer protections that you deserve.