Loan Sharking

What it is:

Loan sharking refers to predatory lending practices by individuals or organizations that charge high interest rates.

How it works/Example:

Loan sharking involves taking advantage of the borrower's weak credit or collateral condition. Typically, when a borrower has no option to secure a traditional bank loan, a loan shark does not usually require collateral for a loan, a bank account or even a written loan agreement. While this may sound good, at first, a loan shark will charge very high interest on the loan, which makes it very difficult to pay the loan back on time, or at all. 

Why it Matters:

Loan sharking is usually the province of organized crime or otherwise usurious lenders. At best, borrowing under such terms is not in a business's or individual's long term best interest.  At its worst, such borrowing can be dangerous.

Best execution refers to the imperative that a broker, market maker, or other agent acting on behalf of an investor is obligated to execute the investor's order in a way that is most advantageous to the investor rather than the agent.