can loan sharks just add any amount of interest?

They can have any interest they want when making the contract. However they can't increase the amount.

The issue is desperate ppl are stupid and don't read the whole contract. So the contract can say 2% interest in bold but somewhere in the middle it can say after 10 days the interest rate will increase by 100%.

So the rate change can happen if specified in the contract.

And also a lot of ppl who take private loans are forced to take them and are too scared to go to the police in fear of retaliation.