I was one of Randell Tiongson’s guests in his Money Talks radio show last night on Energy FM. In our discussion we talked about Filipinos getting buried in debt and eventually resorting to looking for opportunities overseas and leaving their loved ones behind.
I remember falling victim, a willing one at that, to a loan shark about 10 years ago. I couldn’t eat well. I could barely sleep for more than a couple of hours every night. I only worry about what could happen if they come to our house and do something terribly unlikeable. I could have even lost my job.
I recently read a news headline in Ireland that says “Soldier stole money from car park to pay back loan sharks“. AN OUT-of-work soldier came under pressure from loan sharks to repay a debt when he stole nearly €1,000 from a car park office safe, a court heard.
And then just recently (September 1, 2014), “Two teachers and a collector were killed, while four other teachers were injured, after a police officer went on a shooting rampage in the Pangasinan National High School campus in Lingayen town, Pangasinan Monday afternoon.”
Getting buried in debt, especially if the money is borrowed from loan sharks, is just really disturbing and even life-threatening.
What is a Loan Shark?
A loan shark is a person or entity that charges borrowers interest above an established legal rate.
In the Philippines, there are what we call, with racially-offensive taste, the bumbays who offer 5/6 or persons who lend money and charge 20% interest that compound on a monthly basis.
And then there are those who charge even more than the Bumbays and they would really kill borrowers who would hide and won’t pay on time. Yes, they are just around the neighborhood.
By Philippine law (Circular 799 of the Bangko Sentral ng Pilipinas), the legal rate of interest on loans without express contracts should not be more than 6% per annum. But this apply only to banks and other legal financial institutions. Anyone charging more than this is definitely illegal and can be tagged as a loan shark. Some of them can even charge over 100% interest.
A friend has actually borrowed P5,000 from a loan shark and agreed to repay the amount with P10,000 within 60 days!
Beware of Loans Sharks!
If you intend to borrow money from a loan shark, be warned that the money they lend to you will always be backed with either threats of damage to your reputation or even violence so that you can repay the loan.
Should you find yourself in such a position of owing to a loan shark, it’s best to talk to a trusted lawyer or a financial advisor to educate you and help you get out of this crisis.
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Photo credit: Nick
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