Agenda Daily

Moneylender: People prefer ‘quick cash’ solution with loan sharks

The moneylending business is taking a hit in these uncertain times with more people turning to loan sharks for the “quick cash”, The Star reported today.

Licensed moneylenders have to ensure that prospective borrowers meet a set of rules and conditions to qualify for a loan though it may not be as stringent as with banks. Still, many people may find themselves disqualified from taking the desired loan.

“Mostly, they are involved in gambling and want easy access to loans without thinking about the rates. With that, they are turning to loan sharks, despite the possibility of getting into deeper trouble, because they want the quick cash,” Malaysian Punjabi Licensed Money Lenders Association president Beant Singh told the daily.

He added that there are people who then turn to the licensed moneylenders after having failed to repay the loan sharks.

“Obviously, those people will be turned away,” he was quoted as saying by The Star.
According to Beant, there are about 3,250 licensed moneylenders in the country, and he admitted that it is “a struggling industry”.

“The more legitimate borrowers are people who are short of cash and need funds to pay for their weddings, credit cards or car instalments,” Beant told The Star, adding that the loan is capped at RM10,000.

The interest charged ranges from 12% to 18%, depending on whether the borrower puts down some collateral to secure the loan, and the terms may reach up to 20 years in some cases.

Speaking about the ease with which loan sharks operate, Beant said licensed money lenders cannot engage debt collectors and their only recourse against loan defaulters is in the courts.

“The risk is very high for us.

“Instead, we have to interview the person and check with CTOS (a credit reporting agency.) If we think they can’t pay back, we will turn them away.

“Even with our cap of RM10,000 on loans, some don’t pay back,” The Star quoted him as saying.

He reminded potential borrowers to also not fall for the gimmick used by some loan sharks in masquerading as licensed moneylenders.

“Borrowers can check the legitimacy of a moneylending company as they are listed on the urban wellbeing, housing and local government ministry website.”-3/1/2017

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