Lending Money

[nellyp]

Sorry if this is elsewhere but I can omly find info on westerner to Thai lending. my wife wants to lend the guy who harvested our fields 30,000 baht for 3 months at 10% per month. The return is good but I am obviously worried about the money itself. I told my wife that she should have security and the Thai in question says he understands that and has offered to put his harvester up for security. My problem is this---He can get a loan at 205 else where but cannot get finance of the company that he wants to buy a plogh attachment for his tractor from as he is now too old (about 65) plus (and this is my problem with this) he already has a loan with them for the Harvester. This obviouslt means that he is putting up the harvester as security butthat it is not owned by him outright. He is prepared to sign a contract saying that if he defaults on the loan (only 3 months) he will give us the harvester but will keep paying the finance for it. The money for the loan is my wifes money that she earned in Britain and has been sent here from her account in the uk, so I think we can prove the loan has nothing to do with me. I am worried about the finance position as I wanted the papers for the harvester. My wife assures me the contract will be binding but I'm sure she is just doing that Thai thing of assuming all will be well in the end (even after a massive family arguement to get 5,000 back off her brother. I have attached an example of a draft of a contract for the loan. I am no contract lawyer, but the wife said it would not matter and if we wrote it on a shirt it would be OK??? Any advice on the loan and contract would be brilliant. They are coming tomorrow to get the money so any quick replies would be great too.

Cheers

Neil

Loan agreement.doc

[little_muppet]

im not the expert, never lend anyone money or borrow. but from what i read ur agreement , i suggest u put some more details like below its might be useful if u get any problem latr....

-- Date of lending and due date,

-- Place where u signing this agreement

and maybe sign the paper infront of mayor or phu -yai-baan something like that ?

:jap:

[Morden]

Short reply: Don't do it.

Long reply: The finance company almost certainly has first call on the harvester. I doubt whether any contract would be worth the paper it's written on in practice. When he defaults you will have to go to the Courts. They may give in your wife's favour but he still won't pay up, the harvester will be long gone and he won't have any assets. In fact, your wife will probably be reluctant to take him to the Courts. The guy can't get a loan because he's already up to his neck in debt. How many other loans does he have?

I'm offered opportunities to lose money like this every couple of months. The would-be borrower dreams up a story that fools the wife because she is dazzled by the profit potential. Ask a few simple questions about the 'guarantee' that you are bound to be paid back and make a good profit and you will see only stunned silent faces.

Here are some examples:

1. Lend money that will be repaid when the rice harvest comes in. The harvest isn't good or the rice is sold behind your back and there's no cash left. Payment in rice instead? You have to stand in the field for days because they will harvest it two days before they said and it will be gone. Go after them for the money? Where is it?

2. Lend some money for six months with monthly interest with a chanoot as collateral. If you aren't repaid, your wife gets the land. What's the use of the land if you can't sell it? Go to look at the land. It's a narrow rice field, land locked at each end. No use for anything but rice. Access? Oh, the borrower's family owns the access land and will let you cross to get the useless land you snatched from her. Pull the other one Lek. Ask for the access land, about one nan, to be added to the chanoot to guarantee access should you take the main plot and watch heads go down and eyes stare at the ground. Bingo, scam spotted.

These people will cheat anyone. They have come to your wife because you are a multi-millionaire farang who is also stupid. We got out money by being stupid, didn't we? There's no point in trying it on with a local who has no money, is there?

Tell him to use the harvest profit he just made and stop insulting your wife's intelligence. Tell your wife not to bring these dogs to the door in future. Reject any moral pressure, pouting, silences and 'face' nonsense. If you go into this deal I guarantee that you will end up rowing with your wife. Better to deal with the pain ow and show all the others that you aren't playing.

[little_muppet]

Short reply: Don't do it.

Long reply: The finance company almost certainly has first call on the harvester. I doubt whether any contract would be worth the paper it's written on in practice. When he defaults you will have to go to the Courts. They may give in your wife's favour but he still won't pay up, the harvester will be long gone and he won't have any assets. In fact, your wife will probably be reluctant to take him to the Courts. The guy can't get a loan because he's already up to his neck in debt. How many other loans does he have?

I'm offered opportunities to lose money like this every couple of months. The would-be borrower dreams up a story that fools the wife because she is dazzled by the profit potential. Ask a few simple questions about the 'guarantee' that you are bound to be paid back and make a good profit and you will see only stunned silent faces.

Here are some examples:

1. Lend money that will be repaid when the rice harvest comes in. The harvest isn't good or the rice is sold behind your back and there's no cash left. Payment in rice instead? You have to stand in the field for days because they will harvest it two days before they said and it will be gone. Go after them for the money? Where is it?

2. Lend some money for six months with monthly interest with a chanoot as collateral. If you aren't repaid, your wife gets the land. What's the use of the land if you can't sell it? Go to look at the land. It's a narrow rice field, land locked at each end. No use for anything but rice. Access? Oh, the borrower's family owns the access land and will let you cross to get the useless land you snatched from her. Pull the other one Lek. Ask for the access land, about one nan, to be added to the chanoot to guarantee access should you take the main plot and watch heads go down and eyes stare at the ground. Bingo, scam spotted.

These people will cheat anyone. They have come to your wife because you are a multi-millionaire farang who is also stupid. We got out money by being stupid, didn't we? There's no point in trying it on with a local who has no money, is there?

Tell him to use the harvest profit he just made and stop insulting your wife's intelligence. Tell your wife not to bring these dogs to the door in future. Reject any moral pressure, pouting, silences and 'face' nonsense. If you go into this deal I guarantee that you will end up rowing with your wife. Better to deal with the pain ow and show all the others that you aren't playing.

totally agree !

[pjclark1]

Morden said it all!

[nellyp]

Short reply: Don't do it.

Long reply: The finance company almost certainly has first call on the harvester. I doubt whether any contract would be worth the paper it's written on in practice. When he defaults you will have to go to the Courts. They may give in your wife's favour but he still won't pay up, the harvester will be long gone and he won't have any assets. In fact, your wife will probably be reluctant to take him to the Courts. The guy can't get a loan because he's already up to his neck in debt. How many other loans does he have?

I'm offered opportunities to lose money like this every couple of months. The would-be borrower dreams up a story that fools the wife because she is dazzled by the profit potential. Ask a few simple questions about the 'guarantee' that you are bound to be paid back and make a good profit and you will see only stunned silent faces.

Here are some examples:

1. Lend money that will be repaid when the rice harvest comes in. The harvest isn't good or the rice is sold behind your back and there's no cash left. Payment in rice instead? You have to stand in the field for days because they will harvest it two days before they said and it will be gone. Go after them for the money? Where is it?

2. Lend some money for six months with monthly interest with a chanoot as collateral. If you aren't repaid, your wife gets the land. What's the use of the land if you can't sell it? Go to look at the land. It's a narrow rice field, land locked at each end. No use for anything but rice. Access? Oh, the borrower's family owns the access land and will let you cross to get the useless land you snatched from her. Pull the other one Lek. Ask for the access land, about one nan, to be added to the chanoot to guarantee access should you take the main plot and watch heads go down and eyes stare at the ground. Bingo, scam spotted.

These people will cheat anyone. They have come to your wife because you are a multi-millionaire farang who is also stupid. We got out money by being stupid, didn't we? There's no point in trying it on with a local who has no money, is there?

Tell him to use the harvest profit he just made and stop insulting your wife's intelligence. Tell your wife not to bring these dogs to the door in future. Reject any moral pressure, pouting, silences and 'face' nonsense. If you go into this deal I guarantee that you will end up rowing with your wife. Better to deal with the pain ow and show all the others that you aren't playing.

totally agree !

yeah I think I agree too, could myy wife take possession of the harvester though with the finance having to be paid by the Thai guy?

[rgs2001uk]

Short reply: Don't do it.

Long reply: The finance company almost certainly has first call on the harvester. I doubt whether any contract would be worth the paper it's written on in practice. When he defaults you will have to go to the Courts. They may give in your wife's favour but he still won't pay up, the harvester will be long gone and he won't have any assets. In fact, your wife will probably be reluctant to take him to the Courts. The guy can't get a loan because he's already up to his neck in debt. How many other loans does he have?

I'm offered opportunities to lose money like this every couple of months. The would-be borrower dreams up a story that fools the wife because she is dazzled by the profit potential. Ask a few simple questions about the 'guarantee' that you are bound to be paid back and make a good profit and you will see only stunned silent faces.

Here are some examples:

1. Lend money that will be repaid when the rice harvest comes in. The harvest isn't good or the rice is sold behind your back and there's no cash left. Payment in rice instead? You have to stand in the field for days because they will harvest it two days before they said and it will be gone. Go after them for the money? Where is it?

2. Lend some money for six months with monthly interest with a chanoot as collateral. If you aren't repaid, your wife gets the land. What's the use of the land if you can't sell it? Go to look at the land. It's a narrow rice field, land locked at each end. No use for anything but rice. Access? Oh, the borrower's family owns the access land and will let you cross to get the useless land you snatched from her. Pull the other one Lek. Ask for the access land, about one nan, to be added to the chanoot to guarantee access should you take the main plot and watch heads go down and eyes stare at the ground. Bingo, scam spotted.

These people will cheat anyone. They have come to your wife because you are a multi-millionaire farang who is also stupid. We got out money by being stupid, didn't we? There's no point in trying it on with a local who has no money, is there?

Tell him to use the harvest profit he just made and stop insulting your wife's intelligence. Tell your wife not to bring these dogs to the door in future. Reject any moral pressure, pouting, silences and 'face' nonsense. If you go into this deal I guarantee that you will end up rowing with your wife. Better to deal with the pain ow and show all the others that you aren't playing.

totally agree !

yeah I think I agree too, could myy wife take possession of the harvester though with the finance having to be paid by the Thai guy?

The harvester belongs to the finance company until such time as the original loan is repaid, as to see the tabian rot for the harvester, it will be in the name of the finance company.

They tend to do things a bit differently upcountry, I woulnt touch it with a barge pole.

Had some clown come to see me a few months ago wanting to borrow 500,000, how much interest he asked.

None I replied, bring me your chanot and we will go the the local land dept where you can sign it over to my wife, in one year return the money and the wife will then go to the land dept and sign the land back over to you.

Never came back, last I heard he was telling all and sundry about the black hearted farang who had tried to rip him off, yeah right.

Morden says it all.

[gregb]

My wife assures me the contract will be binding

Your wife is wrong. Any such contract is totally and completely unenforceable.

Any interest rate that equates to more than 28% APR is specifically forbidden by law. You can sign all the documents you want at an interest rate greater than this. They are toilet paper.

Unless the interest rate is less than or equal to 28% APR you have just given away the money as a free gift. Of course, you can always use physical violence and threats to try and recover your money, but not the law, because the loan itself is considered usurious and illegal.

Edited December 28, 2010 by gregb

[Asiate]

Hallo ..i just can speak i borrow 3 times Money to long Year good Thai National Friends WITHOUT !! Mortage ..

and what i get back is 3 Times ........ZERO !

[nellyp]

OK enough info......No loan

[thrilled]

10% A minth 120% A year.Are ya trying to get rich?I couldn't sleep at night charging someone that kind of money.

[raylo]

Short reply: Don't do it.

Long reply: The finance company almost certainly has first call on the harvester. I doubt whether any contract would be worth the paper it's written on in practice. When he defaults you will have to go to the Courts. They may give in your wife's favour but he still won't pay up, the harvester will be long gone and he won't have any assets. In fact, your wife will probably be reluctant to take him to the Courts. The guy can't get a loan because he's already up to his neck in debt. How many other loans does he have?

I'm offered opportunities to lose money like this every couple of months. The would-be borrower dreams up a story that fools the wife because she is dazzled by the profit potential. Ask a few simple questions about the 'guarantee' that you are bound to be paid back and make a good profit and you will see only stunned silent faces.

Here are some examples:

1. Lend money that will be repaid when the rice harvest comes in. The harvest isn't good or the rice is sold behind your back and there's no cash left. Payment in rice instead? You have to stand in the field for days because they will harvest it two days before they said and it will be gone. Go after them for the money? Where is it?

2. Lend some money for six months with monthly interest with a chanoot as collateral. If you aren't repaid, your wife gets the land. What's the use of the land if you can't sell it? Go to look at the land. It's a narrow rice field, land locked at each end. No use for anything but rice. Access? Oh, the borrower's family owns the access land and will let you cross to get the useless land you snatched from her. Pull the other one Lek. Ask for the access land, about one nan, to be added to the chanoot to guarantee access should you take the main plot and watch heads go down and eyes stare at the ground. Bingo, scam spotted.

These people will cheat anyone. They have come to your wife because you are a multi-millionaire farang who is also stupid. We got out money by being stupid, didn't we? There's no point in trying it on with a local who has no money, is there?

Tell him to use the harvest profit he just made and stop insulting your wife's intelligence. Tell your wife not to bring these dogs to the door in future. Reject any moral pressure, pouting, silences and 'face' nonsense. If you go into this deal I guarantee that you will end up rowing with your wife. Better to deal with the pain ow and show all the others that you aren't playing.

Having said all that I would advise you to live in the real world. There are plenty of farangs in the loan sharking business in Thailand. One of whom has a TV account and his mate Micky the Duck scans TV every day. Oh did I metion they are UK nationals and there is also a plethora of other nationalities involved. I also know a Swiss guy doing the same. No need for some poster to rave on about different mafias.

You can buy ready made contracts and they are enforceable by law though I am unsure of the interest rate ceiling. Most monies attract much much less.

I believe the lending is your decision, however, I would have identified if the Harvester is in the borrowers name (as usual) or as is normally the case the finance company is listed on the paperwork

If there is enough collateral you can sell the harvester, if he defaults and assuming you can just take it without police back up which requires you go to court and which also happens every day in every country in the world as well as here, as long as the finance company gets its pound of flesh. You did read the TV article about the Governments attempt to defuse loan sharking didn't you??

[raylo]

10% A minth 120% A year.Are ya trying to get rich?I couldn't sleep at night charging someone that kind of money.

Standard pawnbroking interest is 20% and higher in western countries. Forget what it is here but I remember it being much lower. SO who has the higher moral ground?

[glegolo]

rgs2001uk

The harvester belongs to the finance company until such time as the original loan is repaid, as to see the tabian rot for the harvester, it will be in the name of the finance company.

They tend to do things a bit differently upcountry, I woulnt touch it with a barge pole.

Had some clown come to see me a few months ago wanting to borrow 500,000, how much interest he asked.

None I replied, bring me your chanot and we will go the the local land dept where you can sign it over to my wife, in one year return the money and the wife will then go to the land dept and sign the land back over to you.

Never came back, last I heard he was telling all and sundry about the black hearted farang who had tried to rip him off, yeah right.

Morden says it all.

------------------------------------------------------------------------------------

hahaha, fantastic deal. Good job there, I love it. Will actually use it myself next time.

thanks so much.....

Glegolo

[Morden]

Short reply: Don't do it.

Long reply: The finance company almost certainly has first call on the harvester. I doubt whether any contract would be worth the paper it's written on in practice. When he defaults you will have to go to the Courts. They may give in your wife's favour but he still won't pay up, the harvester will be long gone and he won't have any assets. In fact, your wife will probably be reluctant to take him to the Courts. The guy can't get a loan because he's already up to his neck in debt. How many other loans does he have?

I'm offered opportunities to lose money like this every couple of months. The would-be borrower dreams up a story that fools the wife because she is dazzled by the profit potential. Ask a few simple questions about the 'guarantee' that you are bound to be paid back and make a good profit and you will see only stunned silent faces.

Here are some examples:

1. Lend money that will be repaid when the rice harvest comes in. The harvest isn't good or the rice is sold behind your back and there's no cash left. Payment in rice instead? You have to stand in the field for days because they will harvest it two days before they said and it will be gone. Go after them for the money? Where is it?

2. Lend some money for six months with monthly interest with a chanoot as collateral. If you aren't repaid, your wife gets the land. What's the use of the land if you can't sell it? Go to look at the land. It's a narrow rice field, land locked at each end. No use for anything but rice. Access? Oh, the borrower's family owns the access land and will let you cross to get the useless land you snatched from her. Pull the other one Lek. Ask for the access land, about one nan, to be added to the chanoot to guarantee access should you take the main plot and watch heads go down and eyes stare at the ground. Bingo, scam spotted.

These people will cheat anyone. They have come to your wife because you are a multi-millionaire farang who is also stupid. We got out money by being stupid, didn't we? There's no point in trying it on with a local who has no money, is there?

Tell him to use the harvest profit he just made and stop insulting your wife's intelligence. Tell your wife not to bring these dogs to the door in future. Reject any moral pressure, pouting, silences and 'face' nonsense. If you go into this deal I guarantee that you will end up rowing with your wife. Better to deal with the pain ow and show all the others that you aren't playing.

Having said all that I would advise you to live in the real world. There are plenty of farangs in the loan sharking business in Thailand. One of whom has a TV account and his mate Micky the Duck scans TV every day. Oh did I metion they are UK nationals and there is also a plethora of other nationalities involved. I also know a Swiss guy doing the same. No need for some poster to rave on about different mafias.

You can buy ready made contracts and they are enforceable by law though I am unsure of the interest rate ceiling. Most monies attract much much less.

I believe the lending is your decision, however, I would have identified if the Harvester is in the borrowers name (as usual) or as is normally the case the finance company is listed on the paperwork

If there is enough collateral you can sell the harvester, if he defaults and assuming you can just take it without police back up which requires you go to court and which also happens every day in every country in the world as well as here, as long as the finance company gets its pound of flesh. You did read the TV article about the Governments attempt to defuse loan sharking didn't you??

A friend of mine lends money at 4%pm. It's always small amounts, he uses all of the necessary paperwork to make it legal and takes unencumbered and salable collateral that is worth more than the loan amount. Several motorbikes sit in his yard. The OP's case is very different from that and an attempted scam against him and his wife.

[raylo]

Short reply: Don't do it.

Long reply: The finance company almost certainly has first call on the harvester. I doubt whether any contract would be worth the paper it's written on in practice. When he defaults you will have to go to the Courts. They may give in your wife's favour but he still won't pay up, the harvester will be long gone and he won't have any assets. In fact, your wife will probably be reluctant to take him to the Courts. The guy can't get a loan because he's already up to his neck in debt. How many other loans does he have?

I'm offered opportunities to lose money like this every couple of months. The would-be borrower dreams up a story that fools the wife because she is dazzled by the profit potential. Ask a few simple questions about the 'guarantee' that you are bound to be paid back and make a good profit and you will see only stunned silent faces.

Here are some examples:

1. Lend money that will be repaid when the rice harvest comes in. The harvest isn't good or the rice is sold behind your back and there's no cash left. Payment in rice instead? You have to stand in the field for days because they will harvest it two days before they said and it will be gone. Go after them for the money? Where is it?

2. Lend some money for six months with monthly interest with a chanoot as collateral. If you aren't repaid, your wife gets the land. What's the use of the land if you can't sell it? Go to look at the land. It's a narrow rice field, land locked at each end. No use for anything but rice. Access? Oh, the borrower's family owns the access land and will let you cross to get the useless land you snatched from her. Pull the other one Lek. Ask for the access land, about one nan, to be added to the chanoot to guarantee access should you take the main plot and watch heads go down and eyes stare at the ground. Bingo, scam spotted.

These people will cheat anyone. They have come to your wife because you are a multi-millionaire farang who is also stupid. We got out money by being stupid, didn't we? There's no point in trying it on with a local who has no money, is there?

Tell him to use the harvest profit he just made and stop insulting your wife's intelligence. Tell your wife not to bring these dogs to the door in future. Reject any moral pressure, pouting, silences and 'face' nonsense. If you go into this deal I guarantee that you will end up rowing with your wife. Better to deal with the pain ow and show all the others that you aren't playing.

Having said all that I would advise you to live in the real world. There are plenty of farangs in the loan sharking business in Thailand. One of whom has a TV account and his mate Micky the Duck scans TV every day. Oh did I metion they are UK nationals and there is also a plethora of other nationalities involved. I also know a Swiss guy doing the same. No need for some poster to rave on about different mafias.

You can buy ready made contracts and they are enforceable by law though I am unsure of the interest rate ceiling. Most monies attract much much less.

I believe the lending is your decision, however, I would have identified if the Harvester is in the borrowers name (as usual) or as is normally the case the finance company is listed on the paperwork

If there is enough collateral you can sell the harvester, if he defaults and assuming you can just take it without police back up which requires you go to court and which also happens every day in every country in the world as well as here, as long as the finance company gets its pound of flesh. You did read the TV article about the Governments attempt to defuse loan sharking didn't you??

A friend of mine lends money at 4%pm. It's always small amounts, he uses all of the necessary paperwork to make it legal and takes unencumbered and salable collateral that is worth more than the loan amount. Several motorbikes sit in his yard. The OP's case is very different from that and an attempted scam against him and his wife.

Cant argue the scam. Not sure either way but agree with your final conclusion. There are plenty of Thais out there borrowing money and they dont see the hopelessness of their requests. A lot of them believe what they say / ask for / propose.

As you said there are also a lot of scammers.

Was just clarifying the point. There was too much incorrect or insufficient information posted. As previously identified there are lots of Farangs out there earning a bit that way. Some of them are worse than your scammers.

[fatfather]

The max. legal rate per year is 18%, so I was told from a banker. The usual praxis on the country side, mostly done by chinese business people, is to fill out the forms which you can purchase at school material shops and write down a rate of 1,25% per month. The second form is to verify by the borrower that you have the right to go to court in the case he cannot pay back anymore. As a warranty they take the chanote or other land documents. No need to go to the land registration office. The land documents are taken to make sure that no further money can be borrowed on this land. So far no bad praxis. The reality is that beside this legal contract a further intrest rate is taken which brings it to the illegal level of 4%, 8% 20%....... per month, but this is not writen down. The lender have their "teams" to make sure that the money is paid.

If you stay on the legal side and have a good eye whom you borrow money it is a good business (18% per year!!!!) and the Thais will appreciate a "fair" deal.

I agree with the posts before, be carefull and better don't do it if you are not sure what is going on.

Fatfather

[Morden]

The max. legal rate per year is 18%, so I was told from a banker. The usual praxis on the country side, mostly done by chinese business people, is to fill out the forms which you can purchase at school material shops and write down a rate of 1,25% per month. The second form is to verify by the borrower that you have the right to go to court in the case he cannot pay back anymore. As a warranty they take the chanote or other land documents. No need to go to the land registration office. The land documents are taken to make sure that no further money can be borrowed on this land. So far no bad praxis. The reality is that beside this legal contract a further intrest rate is taken which brings it to the illegal level of 4%, 8% 20%....... per month, but this is not writen down. The lender have their "teams" to make sure that the money is paid.

If you stay on the legal side and have a good eye whom you borrow money it is a good business (18% per year!!!!) and the Thais will appreciate a "fair" deal.

I agree with the posts before, be carefull and better don't do it if you are not sure what is going on.

Fatfather

Interesting information. Thanks.

I'm not sure whether many rural Thais know this information but I would always assume that they know how to wriggle out of a debt. Regarding a 'fair deal', there are many who would see this as a sign of weakness.

[pjclark1]

As a warranty they take the chanote or other land documents. No need to go to the land registration office. The land documents are taken to make sure that no further money can be borrowed on this land. So far no bad praxis.

That is false information

You MUST register the loan against the Chanote at the land office for it to be effective.

Then if they get a replacement chanote, it will still have the loan recorded on the back.

[fatfather]

As a warranty they take the chanote or other land documents. No need to go to the land registration office. The land documents are taken to make sure that no further money can be borrowed on this land. So far no bad praxis.

That is false information

You MUST register the loan against the Chanote at the land office for it to be effective.

Then if they get a replacement chanote, it will still have the loan recorded on the back.

That's correct if you loan money from a bank, I've seen chanotes where the backside is full of remarks about borrowed/paid back money (my wife explained me the meaning of the written down). I just know that private loans usually are not registered on the back side and on the county side a lot of land hasn't got proper paper works, some of the land will never get a chanote. I just know the praxis here and it works out.

[Morden]

As a warranty they take the chanote or other land documents. No need to go to the land registration office. The land documents are taken to make sure that no further money can be borrowed on this land. So far no bad praxis.

That is false information

You MUST register the loan against the Chanote at the land office for it to be effective.

Then if they get a replacement chanote, it will still have the loan recorded on the back.

Correct, of course!

As I understand it, no charge against a chanoot is valid unless a copy of the agreement is lodged at the Land Office and noted below the owner's name on the back of the chanoot document.

[raylo]

The max. legal rate per year is 18%, so I was told from a banker. The usual praxis on the country side, mostly done by chinese business people, is to fill out the forms which you can purchase at school material shops and write down a rate of 1,25% per month. The second form is to verify by the borrower that you have the right to go to court in the case he cannot pay back anymore. As a warranty they take the chanote or other land documents. No need to go to the land registration office. The land documents are taken to make sure that no further money can be borrowed on this land. So far no bad praxis. The reality is that beside this legal contract a further intrest rate is taken which brings it to the illegal level of 4%, 8% 20%....... per month, but this is not writen down. The lender have their "teams" to make sure that the money is paid.

If you stay on the legal side and have a good eye whom you borrow money it is a good business (18% per year!!!!) and the Thais will appreciate a "fair" deal.

I agree with the posts before, be carefull and better don't do it if you are not sure what is going on.

Fatfather

Very informative. One point of query as I have not verified it recently.

If the above is correct then if you have to take the offender to court you cannot claim the monies owed above the "registered" interest which I know in 2 court cases to be incorrect.

The subject is of great interest to me and if anyone has any further valid information, not hearsay, it would be good to understand it. Suppose could just read the relevant documents?? And I have no interest whatsoever in being a scum sucking loan shark so no requests please.

[ianguygil]

The max. legal rate per year is 18%, so I was told from a banker. The usual praxis on the country side, mostly done by chinese business people, is to fill out the forms which you can purchase at school material shops and write down a rate of 1,25% per month. The second form is to verify by the borrower that you have the right to go to court in the case he cannot pay back anymore. As a warranty they take the chanote or other land documents. No need to go to the land registration office. The land documents are taken to make sure that no further money can be borrowed on this land. So far no bad praxis. The reality is that beside this legal contract a further intrest rate is taken which brings it to the illegal level of 4%, 8% 20%....... per month, but this is not writen down. The lender have their "teams" to make sure that the money is paid.

If you stay on the legal side and have a good eye whom you borrow money it is a good business (18% per year!!!!) and the Thais will appreciate a "fair" deal.

I agree with the posts before, be carefull and better don't do it if you are not sure what is going on.

Fatfather

Very informative. One point of query as I have not verified it recently.

If the above is correct then if you have to take the offender to court you cannot claim the monies owed above the "registered" interest which I know in 2 court cases to be incorrect.

The subject is of great interest to me and if anyone has any further valid information, not hearsay, it would be good to understand it. Suppose could just read the relevant documents?? And I have no interest whatsoever in being a scum sucking loan shark so no requests please.

I am pretty sure that the maximum rate is capped at 20% not at 18%.

[nellyp]

Since my original post (and advising my wife not to lend the money) she has talked to her friend again. She told them that she could not lend the money against the harvester, and asked if they had ant other security. They have now offered her the deeds to some land as the security. Having read the posts here it seems that these are useless unless the loan is registered on the paperwork. How long would it take to register such a thing. it looks like my wife is prepared to risk HER money with this and i just want her to know the pitfalls. The 10% is half the rate of the lender in their village, who my wife knows well and who has no problem getting loans paid back. She however gives a reduced rate if the borower has an ATM card which she then uses to take the money herself. She tends to do quite small loans herself. i think the missus has seen this and thinks it could be a way to get pin money until she goes back to work. As far as the interest rate cap goes I believe that can be worked around by stating a negotiated repayment amount rather than a rate itself as the repayment period would not be mentioned. But i am not a professional and am just information gathering.

[pjclark1]

They have now offered her the deeds to some land as the security. Having read the posts here it seems that these are useless unless the loan is registered on the paperwork. How long would it take to register such a thing. it looks like my wife is prepared to risk HER money with this and i just want her to know the pitfalls.

You go to the land office with the chanote and the owner, it is done then and there at little if no cost.

Usual condition is money not paid back by xxxxxx then land forfeit.

Edited December 29, 2010 by pjclark1

[nellyp]

They have now offered her the deeds to some land as the security. Having read the posts here it seems that these are useless unless the loan is registered on the paperwork. How long would it take to register such a thing. it looks like my wife is prepared to risk HER money with this and i just want her to know the pitfalls.

You go to the land office with the chanote and the owner, it is done then and there at little if no cost.

Usual condition is money not paid back by xxxxxx then land forfeit.

Thanks for this info it may be useful in the future. For now though, this is a no go. The chanoot offered was only to be used between family members. As far as we can see there is no security so no loan .

Thanks all for the info

neil

[fatfather]

They have now offered her the deeds to some land as the security. Having read the posts here it seems that these are useless unless the loan is registered on the paperwork. How long would it take to register such a thing. it looks like my wife is prepared to risk HER money with this and i just want her to know the pitfalls.

You go to the land office with the chanote and the owner, it is done then and there at little if no cost.

Usual condition is money not paid back by xxxxxx then land forfeit.

Nothing wrong with that. To register the loan on the chanote is usually for "big" loans such as >> 200,000 Baht, not for small loans. As I mentioned before many land documents are not chanote, but 'saw boh goh' {pls pardon my English spelling for Thai words} and there is no possibility to register a loan on them, also banks (only the Thai Farmer Bank will do it sometimes) will not accept these documents for a warranty. Even with no registration on the chanote you can go to court. Court will set up a new date to pay back the borrowed money and cut down the intrest rate to 7% per year. But you should always keep in mind that the costs to go court may be higher than the lended money. I know one German who went to court to claim back money, some million Bhat. The procedure took almost two years and the pay back date was shifted to an aditional five years. I don't know how his case ended for I don't contact him any more. I still think it is a good business, but you have to be very careful, check properly whom to lend money, what the money is needed for and how is the chance to get your money back without going to court. I'm quite sure that once court is involved you lose money.

I know there are a lot of scams on the lending side as well as on the borrowers side, but there is also a business that works. A narrow path with many traps

My wife do this business and I never interfere except that the intrest rate have to be on the legal side. (she like to charge more but I don't allow it) Till up now she do very well.

To the OP's question: If your wife is going to do the deal make sure to get the neccesary legal paper work done, signed by both parties and two witnesses (in a village the head man and his helper) and take some land documents as warranty. Keep this documents safe and make sure that someone go to take the intrest rates monthly. I would not accept a one time pay back of a lump sum, you may lose both, the loan and the intrest.

Fatfather

[chiangmaibruce]

You may both be right ... the legal situation seems to be rather complex and it is my understanding (as a layperson, not a lawyer) that the capped max interest rate varies depending on both the type of loan and the type of lender.

With respect to the type of private loan being discussed here, I think the relevant statute is Section 654 of Thailand's Civil and Commercial Code which stipulates that "interest shall not exceed 15% per year; when a higher rate of interest is fixed by the contract, it shall be reduced to 15% per year".

The max. legal rate per year is 18%, so I was told from a banker. The usual praxis on the country side, mostly done by chinese business people, is to fill out the forms which you can purchase at school material shops and write down a rate of 1,25% per month. The second form is to verify by the borrower that you have the right to go to court in the case he cannot pay back anymore. As a warranty they take the chanote or other land documents. No need to go to the land registration office. The land documents are taken to make sure that no further money can be borrowed on this land. So far no bad praxis. The reality is that beside this legal contract a further intrest rate is taken which brings it to the illegal level of 4%, 8% 20%....... per month, but this is not writen down. The lender have their "teams" to make sure that the money is paid.

If you stay on the legal side and have a good eye whom you borrow money it is a good business (18% per year!!!!) and the Thais will appreciate a "fair" deal.

I agree with the posts before, be carefull and better don't do it if you are not sure what is going on.

Fatfather

Very informative. One point of query as I have not verified it recently.

If the above is correct then if you have to take the offender to court you cannot claim the monies owed above the "registered" interest which I know in 2 court cases to be incorrect.

The subject is of great interest to me and if anyone has any further valid information, not hearsay, it would be good to understand it. Suppose could just read the relevant documents?? And I have no interest whatsoever in being a scum sucking loan shark so no requests please.

I am pretty sure that the maximum rate is capped at 20% not at 18%.

[svtbg]

I lent 100,000 Baht to a Thai colleague 5 years ago and never saw the money again. There is a saying among Thai people which you must learn: If you lend money in thailand, you will never see it back. Don't believe when they talk to you about contracts, etc., it's all bullshit. Don't lend money to any Thai.