Loaning Out Money.

[samsiam]

What's your thoughts on this.

While C/C companies charge around the 24% mark I think....loan sharks charge out at anywhere from 36% to 500%.

Micro finance amongst certain groups of people is an important available resource.

But it really needs to be at affordable rates to be effective for both parties.

No good if the party being lent the money cannot repay it and puts them in further dire financial depths.

No good if the lender cannot get his funds returned without significant problems and issues.

A friend told me yesterday about a company that finances their products to its customers in full and then reaps a 60% return and they have generations of repeat customers.

[wamberal]

What's your point?

[Crossy]

Dunno ^^^, but our local chap does secured loans at 2% per month up to 60% of the value of the security (land usually).

We actually used him once (shock, horror!) as bridging finance to get the restaurant going again after the floods (whilst I awaited payment from a major international company with a deserved reputation for tardiness).

[BigJohnnyBKK]

Dunno ^^^, but our local chap does secured loans at 2% per month up to 60% of the value of the security (land usually).

We actually used him once (shock, horror!) as bridging finance to get the restaurant going again after the floods (whilst I awaited payment from a major international company with a deserved reputation for tardiness).

That's very cheap for a local chap.

I've got a farang friend whose wife charges 6%. I haven't dared ask their tactics for collecting on the bad debts, think it's crazy risky for him but then again he's best buddies with the chief of police who supplies his ganja and girls for their massage shop.

Way to high-risk a way to make a living IMO but to each his own. . .

[nietzche]

Dunno ^^^, but our local chap does secured loans at 2% per month up to 60% of the value of the security (land usually).

We actually used him once (shock, horror!) as bridging finance to get the restaurant going again after the floods (whilst I awaited payment from a major international company with a deserved reputation for tardiness).

That's very cheap for a local chap.

I've got a farang friend whose wife charges 6%. I haven't dared ask their tactics for collecting on the bad debts, think it's crazy risky for him but then again he's best buddies with the chief of police who supplies his ganja and girls for their massage shop.

Way to high-risk a way to make a living IMO but to each his own. . .

You're farang friend sounds like an upstanding fellow!

[samsiam]

Dunno ^^^, but our local chap does secured loans at 2% per month up to 60% of the value of the security (land usually).

We actually used him once (shock, horror!) as bridging finance to get the restaurant going again after the floods (whilst I awaited payment from a major international company with a deserved reputation for tardiness).

Thats very reasonable for sure.

The 6% mentioned is getting up there but still not as bad as many others you hear about.

I once had an interest in opening a chain of Pawn shops, the good pawn, not the bad porn, but some porn is good too....anyway....I have a name that would have been a killer for a chain of such stores along with the slogan....very catchy.

Never got around to it though.....another one of them ideas that sit in the draw.

Pawn shop owners would need some skills I would imagine, experience in a broad range of items of value, gems, watches, jewelry, electronics etc

Straight out loans against security seems a lot simpler.

But regardless...there needs to be a happy balance as 10/15% terms are just highway robbery.

Girls and Ganja from the local cooper....the sort of copper you could call upon in a time of need and watch him run a mile from you.

[GuestHouse]

The OP misses the point that a lot of the "loan business" in Thailand is structured to place the debtor in a position where they cannot repay the debt and therefore must handover the security - land, or buildings.

It is by these means that Thailand's land is being leached out of the hands of cash poor, land rich ethnic Thais into the hands of their recently arrived 'countrymen' from that country to thd North.

[samsiam]

The OP misses the point that a lot of the "loan business" in Thailand is structured to place the debtor in a position where they cannot repay the debt and therefore must handover the security - land, or buildings.

It is by these means that Thailand's land is being leached out of the hands of cash poor, land rich ethnic Thais into the hands of their recently arrived 'countrymen' from that country to thd North.

That point is not missed at all...I think you seem to miss the point of my point.

[farang000999]

As far as I know, these people are not operating legally. I could be wrong as many people seem to always have a story about a friend of a friend who is a loan shark and earns one million baht every month but I believe that the government does license it's "pawn shops" and no everyday Thais cannot just go onto Microsoft Word and write out a loan contract against land/property. If this was the case you would have a "CASH ADVANCE" shop on every street the same way you have an Ice Coffee cart.

Btw, everytime this topic is breached, I can't help but notice that banks loan money against property and they offer rates correlated to the rate of interest set by the BoT that banks borrow at. So as always, I struggle with these friends of friends stories of those reaking 15% interest a month.

[GentlemanJim]

Dunno ^^^, but our local chap does secured loans at 2% per month up to 60% of the value of the security (land usually).

We actually used him once (shock, horror!) as bridging finance to get the restaurant going again after the floods (whilst I awaited payment from a major international company with a deserved reputation for tardiness).

That's very cheap for a local chap.

I've got a farang friend whose wife charges 6%. I haven't dared ask their tactics for collecting on the bad debts, think it's crazy risky for him but then again he's best buddies with the chief of police who supplies his ganja and girls for their massage shop.

Way to high-risk a way to make a living IMO but to each his own. . .

The problem is that your friend and his wife are now in the pocket of the CoP. At anytime he can ask for money, assets etc and he has to be given them without question or the lives of your friend and his wife will fall apart rapidly. Once you get the police to help you do something illegal in this country you are f****d for s long as you stay here. The CoP is now using them and will cash in his chips when he needs/wants to. As you say, very very risky.

[aussiebebe]

My thoughts on this topic are that most Thais I know 'pawn' their gold (or whatever the term is) at the local gold shop and the interest rates are low, aren't they?

[samsiam]

I struggle with these friends of friends stories of those reaking 15% interest a month.

you are not the loan ranger here.

Its called taking advantage of a persons situation.....that situation is usually simply being poor and unable to make ends meet.....to push them further into that or to take their possessions as a result of it has to be one of the career paths on the lower end of the scale.

[farang000999]

My thoughts on this topic are that most Thais I know 'pawn' their gold (or whatever the term is) at the local gold shop and the interest rates are low, aren't they?

this is what confuses me. assuming the person has something of value, gold/land/house... they should be able to borrow against that asset at relatively low interest rates.

and if the person has no assets, than you are in the business of leg breaking. if assets are involved, you reposses them. if there is no asset, then that is how you insure repayment?

yet, on thai visa it is quite common to hear stories of people they know making a fortune in the loan business. so either farang know a lot of leg breakers or i am missing something.

Edited April 22, 2012 by farang000999

[loong]

My thoughts on this topic are that most Thais I know 'pawn' their gold (or whatever the term is) at the local gold shop and the interest rates are low, aren't they?

this is what confuses me. assuming the person has something of value, gold/land/house... they should be able to borrow against that asset at relatively low interest rates.

and if the person has no assets, than you are in the business of leg breaking. if assets are involved, you reposses them. if there is no asset, then that is how you insure repayment?

yet, on thai visa it is quite common to hear stories of people they know making a fortune in the loan business. so either farang know a lot of leg breakers or i am missing something.

I would guess that, same as the rest of the world, Thai banks are not so keen on lending money just because the borrower has land as collateral. Maybe they want to see some sort of proof of income to be sure that they actually have the means to repay the loan.

Some years ago, my GF at that time paid off a loan that her Brother owed that was secured on the parents property. The bank had a 7 year backlog of processing defaulted debt. You can't really blame the banks if they are being more picky with their loans now.

[trainman34014]

Wifey has a cousin that is mortgaged up to the eyeballs with the Bank, Husband works all the overtime available and still skint the day after being paid because the Mrs spends every satang on 'keeping up with the Jones's', going to Temple and bunging dosh there to receive 'good luck' and various other types of gambling. She's tried to borrow half a million Baht from me on several occasions but I won't have anything to do with it so she tells Wifey she married the wrong Farang !

Anyway; every month she borrows 5,000 Baht from a woman in the market and has to pay back 6,000 every time. Two months ago she couldn't pay so the woman sent three heavies to ask for the keys to Hubbys BMW, otherwise every window in the house gets smashed along with anyone who gets in the way. With this she fell at the feet of her neighbour, a Spicy Meat Seller and he paid them off plus another 500 Baht. Wifey tells me she is not sure how Cousin is paying back the meat seller, but thinks he is probably getting a different kind of meat in return !

[farang000999]

Why would the banks not lend someone money against an asset? Afterall the process seems fairly simple. Asset is value at X, loan is X. Loan is significantly less than the value of the asset. Remember, this is fiat money. The banks are just borrowing from the Central bank and then lending for a profit. It is not like the banks can only lend their money in so many places. Fwiw, I know there are legal lenders here who only charge a 1% or 2% interest on assets. Again, not quite sure how someone with assets gets into bed with the leg breakers.

Edited April 22, 2012 by farang000999

[TommoPhysicist]

Why would the banks not lend someone money against an asset? Afterall the process seems fairly simple. Asset is value at X, loan is X. Loan is significantly less than the value of the asset. Remember, this is fiat money. The banks are just borrowing from the Central bank and then lending for a profit. It is not like the banks can only lend their money in so many places. Fwiw, I know there are legal lenders here who only charge a 1% or 2% interest on assets. Again, not quite sure how someone with assets gets into bed with the leg breakers.

You need to show an income to get a loan from a bank.

If they can't see how you can repay, they don't lend.

[h90]

Wifey has a cousin that is mortgaged up to the eyeballs with the Bank, Husband works all the overtime available and still skint the day after being paid because the Mrs spends every satang on 'keeping up with the Jones's', going to Temple and bunging dosh there to receive 'good luck' and various other types of gambling. She's tried to borrow half a million Baht from me on several occasions but I won't have anything to do with it so she tells Wifey she married the wrong Farang !

Anyway; every month she borrows 5,000 Baht from a woman in the market and has to pay back 6,000 every time. Two months ago she couldn't pay so the woman sent three heavies to ask for the keys to Hubbys BMW, otherwise every window in the house gets smashed along with anyone who gets in the way. With this she fell at the feet of her neighbour, a Spicy Meat Seller and he paid them off plus another 500 Baht. Wifey tells me she is not sure how Cousin is paying back the meat seller, but thinks he is probably getting a different kind of meat in return !

That is a big problem in our company....First of all money in advance.

At the end of the month they don't get any salary because they advanced it already.

Than they don't work, try to keep work mounting up so there is a reason for overtime, but no one can OT every day till 2-3 AM and start working again at 8.30.....

[wana]

I struggle with these friends of friends stories of those reaking 15% interest a month.

you are not the loan ranger here.

Its called taking advantage of a persons situation.....that situation is usually simply being poor and unable to make ends meet.....to push them further into that or to take their possessions as a result of it has to be one of the career paths on the lower end of the scale.

its called " business " in most countries

lending money is the same as any other job

if people put their car or house up for loan and dont re-pay

is it wrong for the lender to take the car as its now legally his ?

banks kick people out of their homes every day ,nobody says operating a bank is morally bad or wrong

its a tough lesson to lose a house or a car but people should stop carelessly borrowing and it wouldnt happen

[robblok]

I struggle with these friends of friends stories of those reaking 15% interest a month.

you are not the loan ranger here.

Its called taking advantage of a persons situation.....that situation is usually simply being poor and unable to make ends meet.....to push them further into that or to take their possessions as a result of it has to be one of the career paths on the lower end of the scale.

its called " business " in most countries

lending money is the same as any other job

if people put their car or house up for loan and dont re-pay

is it wrong for the lender to take the car as its now legally his ?

banks kick people out of their homes every day ,nobody says operating a bank is morally bad or wrong

its a tough lesson to lose a house or a car but people should stop carelessly borrowing and it wouldnt happen

Seems you dont have much experience about loans. Banks in the West (and here) have rules and check income so they are sure people are able to repay. They make sure that people don't get in over their head. Yes it does happen but in general the idea is to prevent this.

This is totally different from the modus opperandi of the money lenders here.

[trainman34014]

I struggle with these friends of friends stories of those reaking 15% interest a month.

you are not the loan ranger here.

Its called taking advantage of a persons situation.....that situation is usually simply being poor and unable to make ends meet.....to push them further into that or to take their possessions as a result of it has to be one of the career paths on the lower end of the scale.

its called " business " in most countries

lending money is the same as any other job

if people put their car or house up for loan and dont re-pay

is it wrong for the lender to take the car as its now legally his ?

banks kick people out of their homes every day ,nobody says operating a bank is morally bad or wrong

its a tough lesson to lose a house or a car but people should stop carelessly borrowing and it wouldnt happen

Seems you dont have much experience about loans. Banks in the West (and here) have rules and check income so they are sure people are able to repay. They make sure that people don't get in over their head. Yes it does happen but in general the idea is to prevent this.

This is totally different from the modus opperandi of the money lenders here.

Errrr....I seem to recall that it was Western Banks (USA) that started the cycle of doom for economies by lending millions of Dollars to people who were never going to be able to pay back what they borrowed !

[harryfrompattaya]

Dunno ^^^, but our local chap does secured loans at 2% per month up to 60% of the value of the security (land usually).

We actually used him once (shock, horror!) as bridging finance to get the restaurant going again after the floods (whilst I awaited payment from a major international company with a deserved reputation for tardiness).

That's very cheap for a local chap.

I've got a farang friend whose wife charges 6%. I haven't dared ask their tactics for collecting on the bad debts, think it's crazy risky for him but then again he's best buddies with the chief of police who supplies his ganja and girls for their massage shop.

Way to high-risk a way to make a living IMO but to each his own. . .

Remeber one day a client will kill the wife and your friend so they will not have to pay back. Do not believe me So lend me big money and I will show you. If you can get me 100 million I wll give you 10 million finders fee or a bullet up to you

When the lender does the killing he is not paid back also

Be careful.

[h90]

Dunno ^^^, but our local chap does secured loans at 2% per month up to 60% of the value of the security (land usually).

We actually used him once (shock, horror!) as bridging finance to get the restaurant going again after the floods (whilst I awaited payment from a major international company with a deserved reputation for tardiness).

That's very cheap for a local chap.

I've got a farang friend whose wife charges 6%. I haven't dared ask their tactics for collecting on the bad debts, think it's crazy risky for him but then again he's best buddies with the chief of police who supplies his ganja and girls for their massage shop.

Way to high-risk a way to make a living IMO but to each his own. . .

Remeber one day a client will kill the wife and your friend so they will not have to pay back. Do not believe me So lend me big money and I will show you. If you can get me 100 million I wll give you 10 million finders fee or a bullet up to you

When the lender does the killing he is not paid back also

Be careful.

But no problem than he can take a fresh wife from the massage shop.

[wana]

I struggle with these friends of friends stories of those reaking 15% interest a month.

you are not the loan ranger here.

Its called taking advantage of a persons situation.....that situation is usually simply being poor and unable to make ends meet.....to push them further into that or to take their possessions as a result of it has to be one of the career paths on the lower end of the scale.

its called " business " in most countries

lending money is the same as any other job

if people put their car or house up for loan and dont re-pay

is it wrong for the lender to take the car as its now legally his ?

banks kick people out of their homes every day ,nobody says operating a bank is morally bad or wrong

its a tough lesson to lose a house or a car but people should stop carelessly borrowing and it wouldnt happen

Seems you dont have much experience about loans. Banks in the West (and here) have rules and check income so they are sure people are able to repay. They make sure that people don't get in over their head. Yes it does happen but in general the idea is to prevent this.

This is totally different from the modus opperandi of the money lenders here.

you must have "missed " the global recession that turned the economy upside down ...........

i can assure you ,banks will lend easily and they are not forgiving if your circumstance change

when everyone lost their jobs in europe and america and overnight their 500,000 EURO home

couldnt even be sold for 200,000k and they had signed the mortgage to pay back 500k with 30

years interest on a property that now valued at 200k .....

added to that most people were forced to take a paycut IF they were LUCKY enough to keep their jobs .....

[BigJohnnyBKK]

Way to high-risk a way to make a living IMO but to each his own. . .

You're farang friend sounds like an upstanding fellow!

Actually he's more of a bystander if not wholly innocent, I don't think his wife shares in the proceeds much, and of course he financed the massage biz - some side benefits there I understand. . .

But I can see some nasty complications down the road, her being mia farang is likely to attract more attention than if were a purely local couple. But I guess as long as they're in with the local PTB they're protected. As I said not something I'd want to be associated with.

[robblok]

you are not the loan ranger here.

Its called taking advantage of a persons situation.....that situation is usually simply being poor and unable to make ends meet.....to push them further into that or to take their possessions as a result of it has to be one of the career paths on the lower end of the scale.

its called " business " in most countries

lending money is the same as any other job

if people put their car or house up for loan and dont re-pay

is it wrong for the lender to take the car as its now legally his ?

banks kick people out of their homes every day ,nobody says operating a bank is morally bad or wrong

its a tough lesson to lose a house or a car but people should stop carelessly borrowing and it wouldnt happen

Seems you dont have much experience about loans. Banks in the West (and here) have rules and check income so they are sure people are able to repay. They make sure that people don't get in over their head. Yes it does happen but in general the idea is to prevent this.

This is totally different from the modus opperandi of the money lenders here.

you must have "missed " the global recession that turned the economy upside down ...........

i can assure you ,banks will lend easily and they are not forgiving if your circumstance change

when everyone lost their jobs in europe and america and overnight their 500,000 EURO home

couldnt even be sold for 200,000k and they had signed the mortgage to pay back 500k with 30

years interest on a property that now valued at 200k .....

added to that most people were forced to take a paycut IF they were LUCKY enough to keep their jobs .....

Sure i forgot, i was talking about the Netherlands where they were more selective in loaning out money. The USA ......... i mean crazy over there. Where i am from there were limits to what you can loan based on your salary and how long you have been employed ect.

In the USA the checks were much less.

[samsiam]

I struggle with these friends of friends stories of those reaking 15% interest a month.

you are not the loan ranger here.

Its called taking advantage of a persons situation.....that situation is usually simply being poor and unable to make ends meet.....to push them further into that or to take their possessions as a result of it has to be one of the career paths on the lower end of the scale.

its called " business " in most countries

lending money is the same as any other job

if people put their car or house up for loan and dont re-pay

is it wrong for the lender to take the car as its now legally his ?

banks kick people out of their homes every day ,nobody says operating a bank is morally bad or wrong

its a tough lesson to lose a house or a car but people should stop carelessly borrowing and it wouldnt happen

We are talking about exorbitant rates...the diference between people that charge 200% per year to those that charge anything up to 50%.

Taking someones land because you could not pay back the loan at 200% is not same same as banks that foreclose on you at 6%

[wana]

I struggle with these friends of friends stories of those reaking 15% interest a month.

you are not the loan ranger here.

Its called taking advantage of a persons situation.....that situation is usually simply being poor and unable to make ends meet.....to push them further into that or to take their possessions as a result of it has to be one of the career paths on the lower end of the scale.

its called " business " in most countries

lending money is the same as any other job

if people put their car or house up for loan and dont re-pay

is it wrong for the lender to take the car as its now legally his ?

banks kick people out of their homes every day ,nobody says operating a bank is morally bad or wrong

its a tough lesson to lose a house or a car but people should stop carelessly borrowing and it wouldnt happen

We are talking about exorbitant rates...the diference between people that charge 200% per year to those that charge anything up to 50%.

Taking someones land because you could not pay back the loan at 200% is not same same as banks that foreclose on you at 6%

i dont agree with it either but the people that take dodgy loans are more than likely the same people the banks woud refuse to lend to

so they end up using loan sharks (the legal and illegal kind ) because thats their only option

the loan shark charges a higher interest ,but he also has more to lose since these people who cant get loans from banks

are probably in the worst group for failure to make re-payments

[samsiam]

i dont agree with it either but the people that take dodgy loans are more than likely the same people the banks woud refuse to lend to

so they end up using loan sharks (the legal and illegal kind ) because thats their only option

the loan shark charges a higher interest ,but he also has more to lose since these people who cant get loans from banks

are probably in the worst group for failure to make re-payments

Not all...according to some members on here that loan money out in this way...they get paid back.....some although revel in the thought of huge interest rates in the hope the borrower cannot repay and they get to keep the security.

But....thing is a bank will not loan if its criteria is not met.....their criteria is much different to a day to day lender I think.

[BigJohnnyBKK]

Not all...according to some members on here that loan money out in this way...they get paid back.....some although revel in the thought of huge interest rates in the hope the borrower cannot repay and they get to keep the security.

My ex-mother-in-law has a village front-of-the-shack grocery business, and ensures customer loyalty by extending credit, with a sideline in such informal loans.

Many many of her borrowers never ever pay off the principle, just keep up with the interest payments for years and years. We're mostly talking about micro-credit here, a few thousand baht, it's a very very poor village.

AFAIK she's never actually foreclosed on anyone, has a reputation as a kind-hearted lady, but somehow manages to keep a business together as well, at least enough to provide food for the household and occasionally expand the rice farmland holdings. Tricky balancing act I imagine.