Loan Sharks And Thai Household Debt

[McMagus]

In another popular post we discussed Thai household debt and the way Thais borrow from Peter to pay Paul. I have a friend whose family member went to a loan shark to borrow in order to pay for school fees etc., etc. ... he earns less than 10,000B a month. With repayments at over 200 B a DAY and rising if he cannot pay, what chance does he and his young family have of ever getting out of the clutches of these low life scum.

My questions to Tv members are..what experiences have you or friends had with these vermin? Are there any legitimate loan consolidation schemes around? What advice would you give to help these people get out of their spiraling debts.

[Semper]

these low life scum

Why do you call them that? Your friend willingly went to this "loan shark" to borrow money, fully aware of the conditions.

[h90]

They WENT to the loan shark.....

Don't spend more money than you earn and you are safe.

[Semper]

They WENT to the loan shark.....

Don't spend more money than you earn and you are safe.

Right, but this needs some "thinking ahead" skills. Not all that common around here.

[CPH]

These loan sharks can be nice old rich ladies. It not that simple. The problem is that the Thai state do not protect their people against this practice.

[cmsally]

I don't think you'll find its confined to Thailand. In UK there's Wonga which I think has similar rates if you sit down and work them out.

As long as you have inflation and salaries/profits in many sectors not keeping up with it, then there's going to be a demand.

[h90]

These loan sharks can be nice old rich ladies. It not that simple. The problem is that the Thai state do not protect their people against this practice.

You want to protect grown up people from borrowing money?

Or the other way around, the banks and the government should together ensure that only the banks can have a profit?

I actually don't need the government protecting me from borrowing money

(also I don't need to be protected from casinos, sex on the internet, wrong political opinions, movies that insult my religious feelings, from Alcohol, Cigarettes or other drugs etc etc. I am old enough to decide myself

[mario299]

In the villages near us the interest is usually 2% per month. In the Bangkok area I have seen 5% - 10% - 15% per month. How much did this person borrow and how much interest rate is he being asked to pay for 200 baht per day. ??

Do they have a bad record of repayment previously, are they "risky"?

Many questions here. The banks charge a bit high as well for high risk borrowers.

mario299

[BEVUP]

Its because they have no choice

your talking about people in villages i presume

Some of them have 10 - 20 rai or more & can make a living pending on crop success

Then theres the ones who had but due to failures had to sell of slowly till only the house block left HENCE the only thing they have left will be morgaged for a car so they can go after that allusive big money making out of the ute business - not.

So when thats not making money the need for the hock shops & gold brokers are required ALL BY CHOICE & certainly not to a foriegners likeing

Everything here is a comodity to them (not saying all) including your house & the nice jewelry / motorbike ect

BLOOD IS THICKER THAN WATER

PS . Once read an article on hear as to what number are u on the list (regularly stir the wife up)

[rgs2001uk]

"What advice would you give to help these people get out of their spiraling debts."

Tell them to forget about face, and trying to keep up with the Somchais.

Tell them to spend less than they earn.

[candid]

MIL is tied into a loan shark in her village. Apparently 40% interest is the deal. Family have stopped subsidising her till she sees sense. See how long THAT lasts. I have not been asked to help, nor would I

[BigJohnnyBKK]

In the villages near us the interest is usually 2% per month.

That's extremely low, bordering on fair and reasonable IMO.

Personally I've never encountered rates of less than 4%, and I know several mia farang who make a quite decent living from this. IMO more risky than I'd allow with mine but. . .

The slightly less desperate use pawnshops, where truly secure collateral like gold will bring the rate down a bit. I think psychologically doing it this way forces you to try your best to preserve the asset, just a little bit better than just pissing it away in the wind as is the natural inclination.

[rgs2001uk]

MIL is tied into a loan shark in her village. Apparently 40% interest is the deal. Family have stopped subsidising her till she sees sense. See how long THAT lasts. I have not been asked to help, nor would I

"Apparently 40% interest is the deal"

Is that per month or per year?

I know of cases in Bkk its 50% per month, borrow 2,000 baht. pay it back at 100 baht per day for 30 days.

The local loan shark told me she could give me 10% per month on money she borrowed from me, she would then loan it out at 20% per month, I declined her kind offer.

[h90]

Its because they have no choice

your talking about people in villages i presume

Some of them have 10 - 20 rai or more & can make a living pending on crop success

Then theres the ones who had but due to failures had to sell of slowly till only the house block left HENCE the only thing they have left will be morgaged for a car so they can go after that allusive big money making out of the ute business - not.

So when thats not making money the need for the hock shops & gold brokers are required ALL BY CHOICE & certainly not to a foriegners likeing

Everything here is a comodity to them (not saying all) including your house & the nice jewelry / motorbike ect

BLOOD IS THICKER THAN WATER

PS . Once read an article on hear as to what number are u on the list (regularly stir the wife up)

need a big TV, need a new mobile phone, need a new motorbike, need a new car, everything better and bigger than the neighbor and than bankrupt.....

[Semper]

Its because they have no choice

your talking about people in villages i presume

Some of them have 10 - 20 rai or more & can make a living pending on crop success

Then theres the ones who had but due to failures had to sell of slowly till only the house block left HENCE the only thing they have left will be morgaged for a car so they can go after that allusive big money making out of the ute business - not.

So when thats not making money the need for the hock shops & gold brokers are required ALL BY CHOICE & certainly not to a foriegners likeing

Everything here is a comodity to them (not saying all) including your house & the nice jewelry / motorbike ect

BLOOD IS THICKER THAN WATER

PS . Once read an article on hear as to what number are u on the list (regularly stir the wife up)

need a big TV, need a new mobile phone, need a new motorbike, need a new car, everything better and bigger than the neighbor and than bankrupt.....

.....and don't forget the gambling with borrowed money. I know several who have lost their motorbikes, cars, land etc. just to try to win back the money they've lost on gambling.

For some reason, they can't grasp the first rule of gambling: Don't bet more money than you can afford to lose.

Edited November 1, 2012 by Semper

[inthepink]

Why do these threads always degenerate into ridiculous generalisations about Thai people and money? I know of more than one Westerner who has tried to live beyond their means in Thailand, built up substantial credit card debts in the process and then gone home with their tail between their legs to declare bankruptcy and blame the big, mean, nasty Banks for lending them the money in the first place.

Thinking ahead is a skill that many expats in Thailand are sorely lacking, among others.

Re. the OP - Loan sharks I have encountered in Bangkok charge 20% a month. I do know of one that screwed up and lost around 750,000 baht, which they had borrowed from another, presumably more competitive, loan shark. And your friend's family member should have thought about the repayments before borrowing the money, as someone else pointed out.

Edited November 1, 2012 by inthepink

[McMagus]

Interesting replies so far ... so many assumptions.... so many fatuous replies. I am not too sure as to the amount borrowed but we are talking about a young family ... I have met them, nice young chap, works himself into the ground, wife and small son. He usually gets around 7000 B a month maybe a bit more if he can get some OT. He doesn't drink (maybe the occasional Leo), does not gamble, doesn't womanise. I've seen their 'flat'. One crappy room in the middle of nowhere for 3000 B a month + power etc., etc. They live in BKK .. that is where he can get some work. So don't go lecturing me about him trying to maintain face and have the latest TV etc. Your replies indicate the depth of your understanding. My point is..these practices are clearly exploitative and in the west there are often ways to circumvent loan sharks. My questions were to do with any experiences Tv members may have had and any constructive advice to see how they can get out of their spiraling debt.

I suggest if you have nothing constructive to offer then keep your opinions to yourself.

[chiangmaikelly]

Interesting replies so far ... so many assumptions.... so many fatuous replies. I am not too sure as to the amount borrowed but we are talking about a young family ... I have met them, nice young chap, works himself into the ground, wife and small son. He usually gets around 7000 B a month maybe a bit more if he can get some OT. He doesn't drink (maybe the occasional Leo), does not gamble, doesn't womanise. I've seen their 'flat'. One crappy room in the middle of nowhere for 3000 B a month + power etc., etc. They live in BKK .. that is where he can get some work. So don't go lecturing me about him trying to maintain face and have the latest TV etc. Your replies indicate the depth of your understanding. My point is..these practices are clearly exploitative and in the west there are often ways to circumvent loan sharks. My questions were to do with any experiences Tv members may have had and any constructive advice to see how they can get out of their spiraling debt.

I suggest if you have nothing constructive to offer then keep your opinions to yourself.

They can learn to dance. There are a lot of opportunities for dancers in Thailand. It is a good weekly wage and they also receive tips. I am of course not referring to anything illegal. Dancers at trade shows and the like.

Edited November 1, 2012 by chiangmaikelly

[McMagus]

Interesting replies so far ... so many assumptions.... so many fatuous replies. I am not too sure as to the amount borrowed but we are talking about a young family ... I have met them, nice young chap, works himself into the ground, wife and small son. He usually gets around 7000 B a month maybe a bit more if he can get some OT. He doesn't drink (maybe the occasional Leo), does not gamble, doesn't womanise. I've seen their 'flat'. One crappy room in the middle of nowhere for 3000 B a month + power etc., etc. They live in BKK .. that is where he can get some work. So don't go lecturing me about him trying to maintain face and have the latest TV etc. Your replies indicate the depth of your understanding. My point is..these practices are clearly exploitative and in the west there are often ways to circumvent loan sharks. My questions were to do with any experiences Tv members may have had and any constructive advice to see how they can get out of their spiraling debt.

I suggest if you have nothing constructive to offer then keep your opinions to yourself.

They can learn to dance. There are a lot of opportunities for dancers in Thailand. It is a good weekly wage and they also receive tips. I am of course not referring to anything illegal. Dancers at trade shows and the like.

Well done, another brilliant thought provoking response.

[Semper]

I suggest if you have nothing constructive to offer then keep your opinions to yourself.

Well, maybe you could clear the bill with "these vermin" (your own words) and everybody would be happy?

" Are there any legitimate loan consolidation schemes around?" Not to my knowledge. It sounds like you are still a "newbie" to this country.

[TommoPhysicist]

School is free in Thailand.

Yearly expenses are about 2k a year (books and uniforms), but you can get a government grant to pay that if poor. In Junior school (under age 13), lunch is free too.

So why would they need to borrow money?

Just wondering.

Edited November 1, 2012 by TommoPhysicist

[Semper]

So why would they need to borrow money?

Because the money have been spent on "more important" things.

[h90]

Its because they have no choice

your talking about people in villages i presume

Some of them have 10 - 20 rai or more & can make a living pending on crop success

Then theres the ones who had but due to failures had to sell of slowly till only the house block left HENCE the only thing they have left will be morgaged for a car so they can go after that allusive big money making out of the ute business - not.

So when thats not making money the need for the hock shops & gold brokers are required ALL BY CHOICE & certainly not to a foriegners likeing

Everything here is a comodity to them (not saying all) including your house & the nice jewelry / motorbike ect

BLOOD IS THICKER THAN WATER

PS . Once read an article on hear as to what number are u on the list (regularly stir the wife up)

need a big TV, need a new mobile phone, need a new motorbike, need a new car, everything better and bigger than the neighbor and than bankrupt.....

.....and don't forget the gambling with borrowed money. I know several who have lost their motorbikes, cars, land etc. just to try to win back the money they've lost on gambling.

For some reason, they can't grasp the first rule of gambling: Don't bet more money than you can afford to lose.

yes gambling will be the most...

[CPH]

These loan sharks can be nice old rich ladies. It not that simple. The problem is that the Thai state do not protect their people against this practice.

You want to protect grown up people from borrowing money?

Or the other way around, the banks and the government should together ensure that only the banks can have a profit?

I actually don't need the government protecting me from borrowing money

(also I don't need to be protected from casinos, sex on the internet, wrong political opinions, movies that insult my religious feelings, from Alcohol, Cigarettes or other drugs etc etc. I am old enough to decide myself

Yes I want to protect people against theft. 10 percent interest per month is simply theft or worse than that. Often people do not understand the very high interest, they just need the money for funeral, medicine etc. This practice is also illigal in Europe

[CPH]

Interesting replies so far ... so many assumptions.... so many fatuous replies. I am not too sure as to the amount borrowed but we are talking about a young family ... I have met them, nice young chap, works himself into the ground, wife and small son. He usually gets around 7000 B a month maybe a bit more if he can get some OT. He doesn't drink (maybe the occasional Leo), does not gamble, doesn't womanise. I've seen their 'flat'. One crappy room in the middle of nowhere for 3000 B a month + power etc., etc. They live in BKK .. that is where he can get some work. So don't go lecturing me about him trying to maintain face and have the latest TV etc. Your replies indicate the depth of your understanding. My point is..these practices are clearly exploitative and in the west there are often ways to circumvent loan sharks. My questions were to do with any experiences Tv members may have had and any constructive advice to see how they can get out of their spiraling debt.

I suggest if you have nothing constructive to offer then keep your opinions to yourself.

He should pay the monthly interest so the amount he own do not go to through the roof. Try to negotiata a lower interest rate after some time. As far as I know it is only legal to charge 3 percent per month, but it does not help much as the thai syatem do not care.

[BigJohnnyBKK]

Why don't you pay off the whole amount for him and let him pay it off at say 15% per annum? That would be very nice of you.

But he may end up simply getting back in debt again, maybe even think you'll bail him out again. . .

[Semper]

Why don't you pay off the whole amount for him and let him pay it off at say 15% per annum?

Because he will never see the money again.

[h90]

Why don't you pay off the whole amount for him and let him pay it off at say 15% per annum?

Because he will never see the money again.

yes I wonder how the loan sharks do, to get the money back...

[h90]

These loan sharks can be nice old rich ladies. It not that simple. The problem is that the Thai state do not protect their people against this practice.

You want to protect grown up people from borrowing money?

Or the other way around, the banks and the government should together ensure that only the banks can have a profit?

I actually don't need the government protecting me from borrowing money

(also I don't need to be protected from casinos, sex on the internet, wrong political opinions, movies that insult my religious feelings, from Alcohol, Cigarettes or other drugs etc etc. I am old enough to decide myself

Yes I want to protect people against theft. 10 percent interest per month is simply theft or worse than that. Often people do not understand the very high interest, they just need the money for funeral, medicine etc. This practice is also illigal in Europe

what theft??? the "victims" borrow the money and know how much to pay back. Everyone can do this basic mathematics. And no it is in 99% not for funeral or medicine. It is for gambling, motorbike, mobile phone etc etc.

And as you say in Europe they wouldn't get the money, so in Europe they wouldn't get the medicine or funeral?

[Semper]

Why don't you pay off the whole amount for him and let him pay it off at say 15% per annum?

Because he will never see the money again.

yes I wonder how the loan sharks do, to get the money back...

Edited November 1, 2012 by Semper