A loan shark is a person who offers loans at extremely high interest rates, has strict terms of collection upon failure, and generally operates outside the law. Because loan sharks operating illegally cannot reasonably expect to be able to use the legal system to collect such debts, they often resort to enforcing repayment by blackmail and threats of violence. Historically, many moneylenders skirted between legal and criminal activity. In the recent western world, loan sharks have been a feature of the criminal underworld.
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Loan sharking is not to be confused with predatory lending with extremely high interest rates such as payday or title loans, which is sometimes considered to be "loan sharking" (or, at least, unfavorably compared to loan sharking by critics) regardless of whether it is legal.[page needed][page needed] A key difference between "traditional" loan sharking and predatory lending is that lenders alleged to be engaged in the latter practice are expected to stay within the law when making and collecting loans, and thus the debate into such practices often focuses on whether or not they are ethical as opposed to whether or not they are legal. However, laws regulating lending practices vary so widely between jurisdictions (even in the same country, particularly between states in the United States) that particular practices that might be technically legal (if arguably unethical) "predatory lending" in one jurisdiction might be considered illegal "loan sharking" if attempted in an identical manner in a different locale.