Friday, 12 September 2008
The Voice - Dear Consumer's Voice
Dear Consumer’s Voice
In July I borrowed P5,000 from a loan shark. In late August I came into some money and wanted to repay the loan. I contacted them and asked how much it would cost to settle the loan and was horrified to hear that they said I now owed them over P8,000.
How can this be? What can I do?
I’m sorry but there’s not very much you can do.
Most small scale loan sharks charge 30% interest each month. 30% doesn’t sound very much but that’s almost a third of the amount you borrowed every month, on top of the loan.
You borrowed P5,000 at the beginning of July so in July they would have charged you 30% of P5,000 which is P1,500. In August they would have either charged you another P1,500 in interest or if you failed to pay in July they will have charged you 30% of the total outstanding amount which would have come to another P1,950. Add P5,000 + P1,500 + P1,950 and you get P8,450. Whatever repayments you’ve made you are going to have to pay them an additional P3,000 on top of your loan.
When we got in touch you told us that they didn’t give you a copy of your loan agreement so we couldn’t check what the repayment should be. This is a very serious failure by the loan shark but also by you. It’s astonishingly reckless to borrow that sort of money and not understand what you were meant to repay.
The lesson is to avoid loan sharks if you can possibly afford to. Your bank will always give you better advice than a loan shark. If you must go elsewhere then at least go to one of the legitimate micro-lenders, the ones who can afford high-quality advertisements in national newspapers. Small loan sharks are to be avoided like sharks!