It started innocently enough. Ada, a small business owner in Ibadan, needed money to pay her suppliers for a bulk order of fabric. She’d fallen behind on her loan payments due to a slow season, but she believed business would pick up soon. Her bank had turned her down for a loan due to poor credit, and Ada, desperate, turned to a loan shark for help. The loan was fast, no questions asked, and it seemed like the perfect solution to her problem.

Within weeks, Ada’s situation worsened. The interest on the loan was astronomical, and when she couldn't make the payments, the lender started calling her family and friends, threatening public shame. Her heart raced every time her phone rang. Ada couldn’t sleep, eat, or focus on running her business. The constant anxiety began taking a toll on her mental health. She started feeling hopeless, as if there was no way out.

Ada’s story is tragically common. Loan sharks, with their predatory lending practices, often trap individuals in debt cycles that are impossible to escape. But the hidden cost of dealing with loan sharks isn’t just financial; it’s mental. The stress, anxiety, and depression that come with being trapped in a cycle of debt can be debilitating.

The Hidden Mental Health Costs of Predatory Lending

While loan sharks offer fast cash, the price borrowers pay often goes beyond just money. Below are some of the hidden costs that predatory lending takes on mental health, and how borrowers can find ways to cope.

1. Constant Fear and Anxiety

One of the most immediate effects of dealing with loan sharks is constant fear and anxiety. Loan sharks are known for their aggressive and often illegal debt collection practices, which include harassing phone calls, threats of violence, or public humiliation. The fear of not being able to repay the loan on time, coupled with the worry of being harmed or publicly shamed, can leave borrowers in a state of perpetual anxiety.

For Ada, every phone call became a source of panic. She couldn’t shake the feeling that her reputation was on the line, and she worried about how her business could survive under such immense pressure. Anxiety can quickly spiral into other mental health challenges, such as panic attacks and an overwhelming sense of helplessness.

2. Depression

For many, the feeling of being trapped in debt with no way out can lead to depression. The heavy weight of the debt, combined with the humiliation and harassment that often come with loan shark dealings, can make borrowers feel as though there is no escape.

Ada stopped going to her shop. She was too overwhelmed to manage her day-to-day operations, and her once-thriving business began to falter. The debts only grew, and soon, Ada found herself sinking into depression. She lost interest in activities she once enjoyed, isolated herself from friends and family, and struggled to get out of bed each day.

3. Social Isolation

Loan sharks often use shame as a tactic to force repayment. Borrowers like Ada are left with the fear that everyone in their community will know about their debt. The public nature of the harassment can push people into isolation, as they withdraw from social activities to avoid the shame and judgment of their peers.

For Ada, the calls to her family members were devastating. She felt humiliated and retreated into herself, cutting off contact with friends and family out of embarrassment. This isolation only worsened her mental health, deepening her depression and making it even harder to find a way out of her financial troubles.

A Step-by-Step Solution to Overcoming the Burden

Dealing with loan sharks is not just about managing debt—it’s about reclaiming your mental health. Below are steps you can take if you find yourself or a loved one in a similar situation:

1. Acknowledge the Problem

The first step in dealing with any financial or mental health issue is recognizing the problem. If you’ve taken out a loan from a predatory lender, it’s essential to acknowledge that you’re in a dangerous situation.

• Tip: Write down all the details of the loan, including the amount borrowed, the interest rate, and any threats or harassment you’ve experienced. This will help you have a clearer view of the problem at hand.

2. Seek Legal Help

Loan sharks operate outside the law, and their tactics often involve illegal practices. In Nigeria, the FCCPC (Federal Competition and Consumer Protection Commission) is one of the bodies responsible for dealing with unfair lending practices.

• Tip: Report the loan shark to the FCCPC and explain the harassment you’ve experienced. Many borrowers don’t realize that loan sharks often break the law with their aggressive tactics, and they can face consequences for their actions.

3. Talk to a Mental Health Professional

If the stress of debt is affecting your mental health, it’s crucial to seek professional help. Talking to a therapist or counselor can help you manage the emotional burden of debt and develop coping strategies for anxiety, depression, and stress.

• Tip: Many non-profit organizations provide free or low-cost mental health services to individuals dealing with financial hardship.

4. Consider Debt Consolidation

While loan sharks are not legitimate lenders, if you have multiple loans, debt consolidation through a reputable financial institution could be an option. Debt consolidation allows you to combine all of your debts into one manageable payment with a lower interest rate.

• Tip: Reach out to a registered microfinance bank or a credit union for guidance on consolidating your loans into a more affordable repayment plan.

5. Build a Support System

Don’t isolate yourself. The shame and fear associated with loan sharks often cause people to withdraw, but reaching out to family or friends can be an important source of support.

• Tip: Be open about your struggles. You may be surprised to find that others have been in similar situations and can offer advice or help.

6. Avoid Loan Sharks in the Future

Finally, the best way to protect your mental health is to avoid loan sharks altogether. Explore alternative financing options such as microfinance banks, peer-to-peer lending, or government-backed loans designed to help small business owners.

• Tip: Always ensure that any loan you take is from a registered and reputable financial institution. If you’re ever unsure, consult with a financial advisor or seek legal advice before signing any agreement.

Conclusion: Protecting Both Finances and Mental Health

Ada eventually found her way out of the cycle of debt and mental distress. After seeking legal help and speaking with a mental health professional, she was able to negotiate a better repayment plan with a microfinance bank. The fear, anxiety, and depression she once felt began to fade as she regained control over her finances and her mental health.

Loan sharks don’t just ruin financial lives; they wreak havoc on mental well-being. If you’re in debt to a predatory lender, know that you’re not alone and that there are steps you can take to break free from both the financial and emotional burden. Recognize the signs, seek help, and avoid falling into the same traps in the future.