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Thread: Loan Sharks

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    Loan Sharks

    Been hearing some recent stories in the local village of folks getting behind on payments to the local loan sharks. These are the guys you usually see riding two-up on a Honda CBR-150 or -250 with one guy carrying a small satchel. Weapons on board for sure so not guys you want to mess with. At any rate, has anyone ever had any direct experience with how much interest they charge? People do end up disappearing if they can't pay up. Folks starting restaurants needing a bit of cash use them and we had a neighbor years ago that moved out rather quickly when the business venture was not working out. Getting in dept in Thailand is a dangerous proposition and wondering how wide spread this issue is.
    You Make Your Own Luck

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    Thailand Expat Fondles's Avatar
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    Are you directly affected ?

    If not why care ?

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    "Private" loan sharking isn't as prevalent as it once was some years ago with the advent of the financial institutions freeing up their policies, making it rather simple for the everyday Somchai to gather a loan for whatever reason - be it B50,000 or B500,000. Most Thais would prefer to go this route than to get mixed up in the local underworld, which almost always has ties to larger Mafia holds as well as the usual provincial government officials of some rank or another....

    These sub-Mafias types are never to be fucked with, as associations can be disastrous for families and extended communities - most which is not spoken of in polite company [one's dependency on these elements].

    The guys that you'll find riding around from place to place are almost always "collectors", underlings to the loan shark principle, who are given carte blanche to assess any issues and correct problems if need be.

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    Not me, but the "guys" were in the village looking for someone. Curious as to how steep their rates must be. Can't get a number from the locals so I doubt they even know when they sign up.

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    Quote Originally Posted by thailazer View Post
    Not me, but the "guys" were in the village looking for someone. Curious as to how steep their rates must be. Can't get a number from the locals so I doubt they even know when they sign up.

    We do it for chanote backed loans at 20% in the countryside.
    In the city we "invest" in a short term loan pool and get back 25% in interest.
    No idea what the actual handler gets.

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    Thailand Expat prawnograph's Avatar
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    Woman we know's mother is a loan shark in a small town. Tough old bat. We visited once, front windows of house were boarded up, they had been shot out 'again' by pissed off borrowers.
    Her standard rate, secured by land title, 10% per month.
    Told she and family loathed by local population.

    At our former address, neighbour was a hard looking bloke, 40s, face looked like it had taken many a beating (or was just born ugly). He dealt in 'collections and repos'. Never a problem for us, few visitors and his wife was polite enough. Asked if he could use our garage to clean his motorbike one day it was raining, went out to see how he was going, giving it a a thorough wash, polish, and had emptied the under-seat storage area. Spare tube, some rags, disposable raincoats, and a pistol. That's business.

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    Thailand Expat Pragmatic's Avatar
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    Quote Originally Posted by thailazer
    how much interest they charge?
    They charge 20%. They don't carry guns as some think. Too big a target for the police, to intercept if they did, to confiscate the money. My missus says they use intimidation to get their monies. They will stand outside a debtors house and make it known to all that they've defaulted and they'll keep doing this etc until they get their dosh.
    My missus loans money at 10% per month, not a higher percent which I may have said on another thread.

    Quote Originally Posted by prawnograph
    Her standard rate, secured by land title, 10% per month.
    No security in holding someones 'land titles'. They can carry on farming the land irrespective and the name on the papers which can't be changed without them authorizing it.

    Edit- Changed 3% to 10% sorry.
    Last edited by Pragmatic; 21-09-2014 at 07:39 PM.

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    Thailand Expat prawnograph's Avatar
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    ^ cheers, I don't know the technicalities of papers/titles - just that they have become fairly large (and unpopular) landowners by local standards though acquiring land via their loans business.
    It is then leased back either for an annual rate or a percentage of annual crop return, they don't do any farming themselves.
    How does it work then when they hold papers? Do they take a right of purchase when a loan defaults and then ownership changed legally to clear the debt?

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    Usually it is not handled such a heavy handed. It is practised on every market, where the lender (mostly an old woman) collects the interest every day. Mostly small amounts that however amounts for a good profit.

    Very well known case was an ordinary woman with many kids in Don Muang market who had started so, then with a help of an influential sponsor (Samak, former Bkk governor) - or did she sponsored him? - had grown to billionaire. For many years running story was that one of her sons shot brother in his house, of course, very difficult to prove anything, has the case been ever closed?

    And in the same manner it is practised on a higher scale, among "friends", when something has to be quickly overbridged and no chanote is available. There are no guarantees just the high interest. Not so bad business with no tax, it needs just in a pocket a samuth (notebook, but no laptop) and a pakaa (pen).

    However, there are also cases when such million loans are not repaid...

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    Thailand Expat Pragmatic's Avatar
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    Quote Originally Posted by prawnograph
    cheers, I don't know the technicalities of papers/titles
    Some years ago my missus used my money to loan someone monies based on depositing their 'land paper' as guarantee. I was naive and so was my missus. The person defaulted on the loan. We went to a lawyer, who also happened to be a money lender. Basically he told us that the person could carry on farming the land etc and there was naff all I could do to force a change in name on the papers. All that happens is that it makes it very difficult if the defaulter wants to sell the land in the future. To get new papers one has to make a loss report to the police and then apply for new papers. Apparently they're very strict on issuing replacement papers.
    8 years later I still have the papers and no money. The defaulter still farms the land.

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    Reading these posts and talking with the better half, it is coming to light that there are different types of private lenders out there. Some are friendly, and some are linked to the underworld types. Like pragmatic says, the latter are effective with the intimidation.

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    Quote Originally Posted by Pragmatic View Post
    Quote Originally Posted by prawnograph
    cheers, I don't know the technicalities of papers/titles
    Some years ago my missus used my money to loan someone monies based on depositing their 'land paper' as guarantee. I was naive and so was my missus. The person defaulted on the loan. We went to a lawyer, who also happened to be a money lender. Basically he told us that the person could carry on farming the land etc and there was naff all I could do to force a change in name on the papers. All that happens is that it makes it very difficult if the defaulter wants to sell the land in the future. To get new papers one has to make a loss report to the police and then apply for new papers. Apparently they're very strict on issuing replacement papers.
    8 years later I still have the papers and no money. The defaulter still farms the land.
    That was your mistake for not getting a signed and notarized power-of-attorney giving you rights to the land in case of a default- a land paper by itself without some sort of contract doesn't mean much.
    There he goes. One of God's own prototypes. A high-powered mutant of some kind never even considered for mass production. Too weird to live, and too rare to die.
    HST

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    Wife has been investing a few thousand baht every month to what she calls "share" via SIL. Often asked her how it works but fkd if I can fathom.
    She keeps a log of all "loans"..mostly only a few hundred baht. Term of share investment is 18 months....have received maybe half dozen lump sum "dividends" which equate to 20-30% interest.
    Since most loans seem to be small I think this loan sharking performs a service which is unavailable from institutions..I do not know about defaulter rate but wife tells me if there are then they are blacklisted which is a deterrent I guess.

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    Amazing isn't it...banks can levy horrendous unconscionable service charges and outstanding balance interest on credit cards with total immunity....

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    Thailand Expat Pragmatic's Avatar
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    Quote Originally Posted by FailSafe
    That was your mistake for not getting a signed and notarized power-of-attorney giving you rights to the land in case of a default- a land paper by itself without some sort of contract doesn't mean much.
    You are correct in some ways. The thing to remember is that loan rates are set by the government. If one exceeds that percentage then your acting illegally and the defaulter would win.

    Quote Originally Posted by Necron99
    We do it for chanote backed loans at 20% in the countryside.
    If it came to a court case Necron99 would lose and face possible charges of money lending.

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    Quote Originally Posted by Pragmatic View Post
    Quote Originally Posted by FailSafe
    That was your mistake for not getting a signed and notarized power-of-attorney giving you rights to the land in case of a default- a land paper by itself without some sort of contract doesn't mean much.
    You are correct in some ways. The thing to remember is that loan rates are set by the government. If one exceeds that percentage then your acting illegally and the defaulter would win.
    You're introducing a straw man- the rate charged is irrelevant to doing your due diligence re: the loan. The point is that with a proper contract the borrower will be in default with an actual penalty regardless of the rate being charged (and the defaulter would NOT win- at best, he might be able to get away with paying less interest than originally agreed upon)- your own example is what happens when you talk to a lawyer after you've been screwed rather than limiting your exposure by talking to him before you enter into the deal.

    If you, as the lender, don't hold all the cards, then don't make the loan in the first place- if you give a borrower the chance to take advantage, they usually will.

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    Quote Originally Posted by Pragmatic View Post
    Quote Originally Posted by FailSafe
    That was your mistake for not getting a signed and notarized power-of-attorney giving you rights to the land in case of a default- a land paper by itself without some sort of contract doesn't mean much.
    You are correct in some ways. The thing to remember is that loan rates are set by the government. If one exceeds that percentage then your acting illegally and the defaulter would win.

    Quote Originally Posted by Necron99
    We do it for chanote backed loans at 20% in the countryside.
    If it came to a court case Necron99 would lose and face possible charges of money lending.

    The amount over the official interest cap is not charged as interest but bundled into the contract as fees.

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    Quote Originally Posted by crepitas View Post
    Wife has been investing a few thousand baht every month to what she calls "share" via SIL. Often asked her how it works but fkd if I can fathom.
    She keeps a log of all "loans"..mostly only a few hundred baht. Term of share investment is 18 months....have received maybe half dozen lump sum "dividends" which equate to 20-30% interest.
    Since most loans seem to be small I think this loan sharking performs a service which is unavailable from institutions..I do not know about defaulter rate but wife tells me if there are then they are blacklisted which is a deterrent I guess.

    The shares are an auction game.
    Say there are 5 of you committed to investing 100 baht each week.
    This means every week on share day there is 500 baht of capital available, and the shares mature after 5 weeks meaning 2500 in total.
    On share day you bid to access the capital, the person who agrees to pay the highest interest gets the 500 baht but now has a bigger weekly contribution to pay back the interest. Next share week you bid for the 500 + any accrued interest.

    You can make money on it by not bidding in which case the last week you get it all (2500 + all interest) or by taking it when no one else wants it at a point where the accrued capital is more than the interest you will have to pay.

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    Quote Originally Posted by crepitas View Post
    Amazing isn't it...banks can levy horrendous unconscionable service charges and outstanding balance interest on credit cards with total immunity....
    Have to wonder how the financial institutions would perform if the majority of the populations refused to do business with them, largely....

    Don't become dependent on loan systems.
    Don't use credit or debit cards.
    Last edited by thaimeme; 22-09-2014 at 07:47 PM.

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    I don't loan money, but in the past few years have bought (through my Thai proxy) several distressed properties for screaming good deals. mostly from folks who have gambling issues. I'm ready to snap up the next one to fall my way.

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    Thailand Expat Pragmatic's Avatar
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    Quote Originally Posted by FailSafe
    your own example is what happens when you talk to a lawyer after you've been screwed
    The lawyer never billed me for his services. And as a lender of money himself he said he only charges 3% and only on 'Chanote' titled land.

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    Quote Originally Posted by Pragmatic View Post
    Quote Originally Posted by FailSafe
    your own example is what happens when you talk to a lawyer after you've been screwed
    The lawyer never billed me for his services. And as a lender of money himself he said he only charges 3% and only on 'Chanote' titled land.
    So? What does that have to do with anything? I have no doubt the lawyer manages to get paid as he sets up the loans in a way that minimizes his risk, and had you asked beforehand, he probably would have told you that for free as well.

    Regardless of the interest amount that's being charged, you need a power-of-attorney, not just the deed itself. If everything ends up in court, the worst that will happen is the judge will reduce the originally agreed-upon interest to the legal maximum (though usually the lawyers will work something out before the judgment is made as no borrower wants something like this on their record)- from there, the repayment terms are open to negotiation- once a judgment or settlement is made, the borrower will be legally compelled to pay back the loan either in cash or forfeiture of the land (of course, the lender can make things easy or difficult as he chooses, but in the end he'll get paid).

    Most borrowers want to avoid court and end up paying a higher percentage than the court would probably rule as even though their interest payment might be decreased, they'll be forced to make a timely repayment, and that might mean the loss of their land (or whatever they used as collateral), and loans are usually made at about 40%-50% of the value of the collateral (plus they'll never get another loan). Thais hate giving up land and will pay up to avoid it (or screw the lender if possible). Most prefer to negotiate with the lender instead of involving the legal system.

    As I said before, the lender needs to make sure everything is completely in his favor before making a loan- if not, he'll end up regretting it. The rate of interest being charged is irrelevant (this should be done even if the loan is interest-free).
    Last edited by FailSafe; 23-09-2014 at 05:05 AM.

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    Quote Originally Posted by Necron99 View Post
    Quote Originally Posted by crepitas View Post
    Wife has been investing a few thousand baht every month to what she calls "share" via SIL. Often asked her how it works but fkd if I can fathom.
    She keeps a log of all "loans"..mostly only a few hundred baht. Term of share investment is 18 months....have received maybe half dozen lump sum "dividends" which equate to 20-30% interest.
    Since most loans seem to be small I think this loan sharking performs a service which is unavailable from institutions..I do not know about defaulter rate but wife tells me if there are then they are blacklisted which is a deterrent I guess.

    The shares are an auction game.
    Say there are 5 of you committed to investing 100 baht each week.
    This means every week on share day there is 500 baht of capital available, and the shares mature after 5 weeks meaning 2500 in total.
    On share day you bid to access the capital, the person who agrees to pay the highest interest gets the 500 baht but now has a bigger weekly contribution to pay back the interest. Next share week you bid for the 500 + any accrued interest.

    You can make money on it by not bidding in which case the last week you get it all (2500 + all interest) or by taking it when no one else wants it at a point where the accrued capital is more than the interest you will have to pay.
    Thanks for that mate..sorta got the impression it was a bit of an auction..probably thought that was too simple..all is clear now..goodonya

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    As far as I know top legal rate for interest is 3% monthly on simple loans between individuals. You can actually buy the loan form booklets that have all the legaleze written out and you just fill in the numbers. Normal loan rates are 5-10% per month through the local gold shops and other loan businesses rates dependent on security. I have also heard of many loans for fixed periods with secured property where the interest is paid up front for the portion exceeding 3%. In other words the paper is written for more money than is actually borrowed and the loan is written at 3% with the total payment set to balance out the 5% or 10% per month whatever the agreed upon price is. I have never personally heard of anyone being injured over loans as all the ones I know of are secured and the way they are secured generally greatly favors the lender. Why would they want to break your legs when they can just evict you and take your house. Eviction process would take about 6 months and they factor that into the loan. For example a 2 million baht house will only secure about a 1 million baht loan that way if the loan defaults the lender makes a big enough profit to pay legal fees and can sell the house at a cut price to recover their money quickly.

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    The Thai mafia use Indians around here for Loan sharking.

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