Charging 5% Interest Per Month On Secured Loans

[Kf6vci]

I had known of gold based loans costing 18% interest p.a., but this 5% per month deal secured by a lot (land) makes me wonder about regulation and legal limits on how much interest can be charged. The land is worth many times the amount borrowed against it, of course.

Just wondering if anyone knows about this and if this is illegal, would there be a point in complaining to some authority about it?

[MrSquigle]

yeah excellent isn't it.

[sweetchariot]

No there are no regulations. A friend of mine put up the money for his wifes loansharking business up in Isaan somewhere. They charge between 3 and 5% per month depending on the amount, and the individual's standing. Not a bad swrew when you consider they have nearly 5m lent out over 4 villages.

Edit to add: They will only ever lend with security btw, I don't think unsecured lending exists in LOS.

Edited December 1, 2007 by sweetchariot

[soundman]

No there are no regulations. A friend of mine put up the money for his wifes loansharking business up in Isaan somewhere. They charge between 3 and 5% per month depending on the amount, and the individual's standing. Not a bad swrew when you consider they have nearly 5m lent out over 4 villages.

Edit to add: They will only ever lend with security btw, I don't think unsecured lending exists in LOS.

Yes, there are some minimal regulations. Any contract or dispute over monies owed & interest sort after can only be levied at 1.5% per month (18% per annum). Any loaned sum where no pre-agreed interest rate is signed by both parties, the maximum legal rate of interest is 1.5% per month.

If an idividual signs a loan contract & agrees within that contract to 5% or even 10% per month, that is legal too.

Soundman.

[Gary A]

Three to five percent is cheap. My wife got a friend of hers out of hock by paying off the shark. The shark was charging eight percent per month. My wife loaned her the money for three percent per month. The loan is secured with seven rai of land. The worst part is that her friend is not paying the interest and although my wife will get her money back, the shark will eventually get the land because the woman will run right back to the shark when my wife's payoff is due.

[blizzard]

what do i need to do to set up a legal loansharking buznit? sounds good to me.

[LoveDaBlues]

I had known of gold based loans costing 18% interest p.a., but this 5% per month deal secured by a lot (land) makes me wonder about regulation and legal limits on how much interest can be charged. The land is worth many times the amount borrowed against it, of course.

Just wondering if anyone knows about this and if this is illegal, would there be a point in complaining to some authority about it?

5% a month is not legal. Normally what is done is that legal papers are drawn up at the legal rate of 15% per year. These papers are recorded at the land office and the 'lender' takes possesion of the 'borrowers' chanote. Of course, the 'real' rate of 5% a month is in place.

As far as complaining to the authorities; this tells me you're a newbie to Thailand. Don't entertain this idea and best not to even discuss it outside this forum.

Lending money (if you are Thai) is an easy way to make extra baht and can be done on a small or large scale. My wife's cousin loans to other employees at the BKK factory where she works and charges 20% to be paid back on payday. She has never been stiffed. We're talking small loans here (normally 200-500 baht) but it can add up.

[Gary A]

what do i need to do to set up a legal loansharking buznit? sounds good to me.

The first thing you need to do is hire a couple of good bodyguards. The local sharks DON'T like anyone intruding into their territory. I was worried about my wife taking the land paper away from our local shark but she wasn't worried because she knows both parties involved and the shark knows that the lady is a friend of my wife. My wife told me that the legal maximum interest rate is 1.6 percent per month. I have no idea if that is factual but I do know that loan sharking is a way of life here.

[johnnyk]

All you have to do is find bodyguards willing to mess with an established shark's rice bowl!

LS-ing may not be legal but its certainly pervasive as many country people don't have bank accounts and/or don't trust banks or have poor/non-existent credit ratings.

[Gary A]

From Pattaya City News;

Just before Dawn on Thursday, Police were called to the PP Orchid Apartments in Soi Bongkot, Central Pattaya, to investigate a shooting. One woman was injured in the shooting, Khun Goongnan aged 32. She sustained a single gun shot wound to her stomach. She was taken to Banglamung Hospital where the victim’s boyfriend, Khun Chockchai aged 29 explained that he had borrowed money from an illegal money lender known as “Dook”. He had borrowed 8,000 Baht and with interest charges, the debt totaled 20,000 Baht which was due to be paid back by 19th November. He was unable to pay back the money and on Thursday Morning, the pair were sitting watching TV when an unknown man approached the front door and placed the barrel of his gun through a hole in the front door and expelled one shot which injured the woman. Police are now attempting to locate the shooter and money lender as a matter of urgency.

[LoveDaBlues]

From Pattaya City News;

Just before Dawn on Thursday, Police were called to the PP Orchid Apartments in Soi Bongkot, Central Pattaya, to investigate a shooting. One woman was injured in the shooting, Khun Goongnan aged 32. She sustained a single gun shot wound to her stomach. She was taken to Banglamung Hospital where the victim’s boyfriend, Khun Chockchai aged 29 explained that he had borrowed money from an illegal money lender known as “Dook”. He had borrowed 8,000 Baht and with interest charges, the debt totaled 20,000 Baht which was due to be paid back by 19th November. He was unable to pay back the money and on Thursday Morning, the pair were sitting watching TV when an unknown man approached the front door and placed the barrel of his gun through a hole in the front door and expelled one shot which injured the woman. Police are now attempting to locate the shooter and money lender as a matter of urgency.

And some of the brainiacs on this forum want to get involved in this.........

[blizzard]

how mut do bodyguards charge.........lol.

and is 2 enough...........lol.

if said gentlemen who owed money asked for my help i would have advised him to go to another shark and put it all on second half under 37.5 in the hawaii-washington football game. into 4th quarter 0-0-. and if he lost this. do it again on another one of my picks till he won one.

ps i did take my advice and put down 2k with my local bookie somchai.................

Edited December 2, 2007 by blizzard

[Iambabababor]

, I don't think unsecured lending exists in LOS.

It does - but only once!!!!!!!!

[johnnyk]

Loan sharks swim in very deep water. Swim at your own risk.

[bankei]

I know of someone who lends money out at 20% per month. small sums of about 40,000B. She has about 120,000 out at any one time.

One of her other distant family members lend out for 35% per month and he says he now has 60,000,000B saved up. He has a very nice house so he must be doing alright.

[LivinLOS]

I seem to remember reading that interest on secured loans could legally be 4% ?? From memory I think all the gold shops who hock gold I can remember asking charged 3 - 4 % rates.

Of course legality is hardly relevant, I know bar girls who borrowed small sums usually under 5k unsecured (I dont know how it was risk assessed by the LS) who paid 5 for 4 monthly (might even have been 4 weekly).. this was described to me by one older woman as the 'Chinese system'.. Thats a monthly rate of 25% !!

[chiangmaibruce]

Hi. I have read these post with interest but can anyone actually point me in the direction of the actual law or regulations that (are meant to) apply? Ideally something on the web and preferably in English.

I don't want to borrow or lend but need this info for a project I am working on. Many thanks if you can assist

- CB