History

The practice of loan sharking has been around since biblical times and in America this unscrupulous practice was originally carried out in the 19th century by salary and chattel mortgage lenders. Currently, loan sharking is associated with organized crime where loans are made at high interest and involve the use of violence as a means for collecting the debt.

Usury Laws

There are laws that make lending money with extremely high interest rates illegal. Many regulations for lending companies and individuals (including loan sharks) have been set in place by the government to curb this practice.

Interest Rates

Loan sharks make large amounts of money through the use of extremely high interest rates and this is the major reason why people have a hard time paying off the debt.

Violence

Violence is the primary means for collection of a debt for loan sharks. Debtors who are late on their payments are threatened with physical force and in some cases even death.

Punishments

Each state has its own usury laws and regulations for lenders. These laws usually prohibit the practice of loan sharking. Sentencing for loan sharking violations varies by state and could result in a 5- to 20-year prison term and fines.

Source:

LoanSharks.com: Beware of Loan Sharks

UsuryLaw.com