Loan shark rate?

Reader question:

Please explain “loan shark rate” in this sentence: “They were charged interest at a loan shark rate.”

My comments:

They had to borrow from money lenders who charge them an exorbitant interest rate.

Loan shark refers to one of these greedy money lenders, be they a person, a gang or a bank.

The question is, of course, why is a money lender called a loan shark?

“Oh, the shark”, you see, “has pretty teeth, dear”, I’m quoting Mack the Knife, of course, sung by Louis Armstrong, “and he shows them, pearly white...”

However, “when the shark bites with his teeth, dear, scarlet billows start to spread...”

Now in the song, the shark is likened to MacHeath the serial killer who uses nothing but a jackknife. “Just a jackknife has MacHeath, dear, and he keeps it out of sight... Fancy gloves though wears MacHeath, dear, so there’s not a trace, mmm of red. On the sidewalk, Sunday morning, lies a body, oozing life. Someone sneaking around the corner, is that someone Mack the Knife?”

So you see, the shark, pretty teeth and all, can be very lethal, as is Mac the Knife. Hence the shark is compared to greedy money lenders, whose effect on people can also be devastating – I think of debt prisons, broken families, suicides and so forth.

Actually, it’s not fair to compare money lenders, who are human (I suppose), to sharks that roam the oceans. It’s not fair to the sharks, I mean.

Even the most deadly sharks, you see, don’t kill more than they can feed. In other words, they kill to eat and fill their belly. Unlike money lenders, sharks don’t hang their success on whether or not they have made more unnecessary kills than other sharks. In short, they don’t overkill because they haven’t developed the sinister idea of accumulating wealth.

Money lenders, on the other hand, make a business out of interest earning, a career and sometimes the whole purpose of their lives. Hence, the higher the interest, the merrier; the more money made, the mightier they feel.

Actually, it’d be more appropriate to liken money lenders to MacHeath, the serial killer that roam the human street. Armies of them, as a matter of fact, who all wear fancy gloves, make kills systematically and do so without “a trace, mmm, of red.”

Anyways, loan sharks are people who lend money to gain immorally high interest and they’ve been a scourge to society since the very first gold coin was minted.

Well, to be perfectly fair, we have to admit that loan sharks are there for a reason – they serve those who find themselves in a deep hole financially and are desperate for money. And so, perhaps, people should all learn to avoid putting themselves into that desperate position in the first place.

Indeed, forget money lending for a second, even innocent money borrowing is something a lot of people frown upon, and for good reason. As the fisherman said in the Old Man and the Sea (by Ernest Hemingway): First you borrow, then you beg.”

In China, we have countless tales to repeat from friends who lose their friendship for one another after money is involved. Or as Mark Twain once said, friendship may last a life time if the friends don’t borrow money from one another.

Or something like that. Mark Twain said it more eloquently as a matter of fact, but you get the point.

Alright, here are media examples of loan sharks:

1. The mother of the late Adrian Dunne says loan sharks threatened to kill him and his family.

They moved from place to place to try and avoid these people. They were under serious pressure. Adrian rang me looking for “50,000 and he was desperate”, said Mary Dunne.

He said they were following him and threatened to rape the children and kill himself and Ciara.

Mrs Dunne spoke of the pressure felt by Adrian and Ciara before the pair were tragically discovered dead along with their two children at their home in the Moin Rua estate in Monageer last year.

The couple had tried to start up their own basket-making business in New Ross and Mrs Dunne believes they borrowed money from the wrong people’ after being refused by the banks.

- Loan sharks, Independent.ie, March 5, 2008.

2. Loan sharks are unlicensed lenders, they operate illegally and away from any sort of regulation that governs the financial industry.

They are prepared to lend to the financially vulnerable but charge astronomical interest and the borrower is not protected by any form of contract or terms and conditions. The lobbying group Debt on our Doorsteps estimates that as many as 7m people – or 165,000 households in the UK – are forced to use loan sharks because they can’t find credit elsewhere.

With interest rates that can easily exceed 100%, and even top 1,000%, loan sharks are clearly the most expensive ways to borrow money.

If you fail to meet repayments or agree to their demands they will often use intimidation and threats of violence to extort large sums of money from you.

- Loan sharks, Metro.co.uk, October 26, 2009.

3. Believe it or not, a whopping 18,000 college students have taken high-interest loans simply to keep with their friends who mainly use iPhones and iPads on campus. According to the report out of Beijing, Twenty thousand students applied for the student loans and 90% of them chose to buy Apple products with the funds in central China’s Wuhan city.

Although the interest rates on these student loans were close to a loan shark’s rate at over 47% on a 12 month term, the students still applied for the loans with a minimum down payment to walk away with an Apple product. Paying off the loans is another matter.

A student of Wuhan University of Science and Technology surnamed Yu stated that “Apple products are a common topic or a particular community in campus. I used to feel isolated while they were discussing and playing with iPhones or iPads.” About half of her classmates and roommates have an iPhone. “I felt embarrassed even to take a look when they were in a heated discussion about a new application,” Yu said.

Talk about dedicated Apple fans. Here’s a hearty two thumbs up to the students in Wuhan city. Now pay up.

- 18,000 Chinese Students take out Loans to buy Apple Devices, PatentlyApple.com, March 21, 2013.

About the author:

Zhang Xin is Trainer at chinadaily.com.cn. He has been with China Daily since 1988, when he graduated from Beijing Foreign Studies University. Write him at: zhangxin@chinadaily.com.cn, or raise a question for potential use in a future column.