VietNamNet Bridge – Several weeks before the Lunar New Year (Tet holiday), the demand for cash is on the rise, making it the best time for loan sharks.

For workers in industrial parks, on the roads around their inns, many leaflets introducing attractive credit packages with "simplified procedures, quick-disbursement, low interest rates" are spread.

Such leaflets are also distributed around inns of students and poor people.

Workers only need to mortgage their ATMs, IDs or worker cards to borrow up to VND10 million (nearly $500). Some lenders are willing to loan without mortgage, on condition that the borrowers are guaranteed by an acquittance.

The common interest rates are divided into two categories. For those with collateral such as houses and vehicles... the highest loan is up to VND2 billion (nearly $100,000), at rates ranging from VND1,000-VND2,000/VND1 million/day.

For lenders who mortgage their personal papers or through their acquittances, the loans depend on reliability. Normally, the interest rate is from VND3,000 to VND10,000/VND1 million/day.

It is estimated that these interest rates are equivalent to 182-255 percent a year.

Nguyen Van Chung, 22, from Soc Son district, Hanoi, who works at the Hansol Thai Nguyen Co. Ltd, said: "I have used this service many times. The biggest loan was over VND10 million ($500). The interest is VND5,000/ VND1million a day. On maturity, if the borrowers can’t pay the loan, they can call the lenders to delay, but not more than one week.”

In many cases borrowers who cannot pay the debt were arrested and beaten. Their families were threatened to pay the debt.

Lenders are willing to give short-term loans to workers and they get the paid when workers get salaries at the month’s end.

Many workers said that their salary is low and Tet bonuses are low. To have money to buy gifts back home at Tet, they have to borrow from usurers and pay the debts after Tet.

The black credit is easy to get but difficult to pay because the borrowers are usually not interested in the conditions for the loans, don’t read well and understand all the terms specified in the loan papers and the lenders don’t use a percentage in calculating the interest money but only specific numbers. Therefore, the borrowers don’t know the interest rates they must pay.

Under Vietnamese law, interest rate is agreed upon by the parties, but may not exceed 150% of the base rate set by the State Bank of Vietnam for the corresponding type of loans. The loan with interest rates of VND5,000-VND7,000 per VND1m/day violates the regulations on interest rates.

However, it is difficult to punish usurers because it is extremely difficult to prove the violation as the high interest rates are usually not written on loan papers.

According to statistics of the police, in 2010-2015, the country had more than 4,900 cases related to "black credit".

Ms. Tran Thi Hong Hanh, General Secretary of the Banking Association, said the basic characteristic of black credit is lending at very high interest rates, usually 3-9 times or even 10-20 times higher than the banking rate.

Hanh said the main cause leading to the chain of bankruptcies in recent times is creditors investing in the property market, gold, and foreign currencies... but these markets were stagnant. The pressure to repay loans forced them to borrow from loan sharks.

Linh Nhat