the reality of small loans in DR

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playacaribe2

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Jan 9, 2004
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dv8 said:
recently businesses in zona franca in san pedro banned loan sharks from entering the area. in return, they organized a protest outside the place.
http://www.diariolibre.com/noticias...s-de-parque-industrial-de-san-pedro-GX4880967
the loan sharks were charging interest rate of 20% a week...
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Interest rates from legal finance houses accrue at a pace of 100% per annum. Quite high by first world standards, but they reflect the risk of default by the borrowers.

But 20% a week......and I bet there is no shortage of people willing to loan at those rates. Sadly, there is no shortage of people taking these loans. I am amazed that people will float loans like these....just to preserve a perceived status and acquire a new phone (one example of a persons reasons for taking them).


Respectfully,
Playacaribe2
 
C

cbmitch9

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Nov 3, 2010
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20% a week is very high but also reflects the desperation of the individuals who take those loans.
I have known people who use those loans to purchase school clothes and materials. They don't call them "loan sharks" for nothing.
I have also known of individuals who took loans, skipped the country and never repaid the loans. Dirty but necessary business. Borrower and lender beware.
 
cobraboy

cobraboy

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Jul 24, 2004
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Wow. Makes our 17% bank rates on motorcycle loans look like a bargain.
 
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Timotero

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playacaribe2 said:
Interest rates from legal finance houses accrue at a pace of 100% per annum. Quite high by first world standards, but they reflect the risk of default by the borrowers.

But 20% a week......and I bet there is no shortage of people willing to loan at those rates. Sadly, there is no shortage of people taking these loans. I am amazed that people will float loans like these....just to preserve a perceived status and acquire a new phone (one example of a persons reasons for taking them).


Respectfully,
Playacaribe2
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Isn't that what Anocea did? And I believe that business model failed for everyone?
 
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playacaribe2

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Timotero said:
Isn't that what Anocea did? And I believe that business model failed for everyone?
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I believe Anoeca's model was a bit more intricate than lend and collect.....but in the end it certainly turned out to be flawed.

Finance houses (legal kind) are alive and well and thriving in the DR. They do everything from finance colmado inventory to salon equipment etc.,.....and collect weekly.

Duration of many of those loans is usually no longer than 60 days....and if paid on time are renewed.

Respectfully,
Playacaribe2
 
CristoRey

CristoRey

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Here in Santiago if anyone wants to watch one of the loan shark?s ?collectors? in action
collecting the money their owed, just pass by La Sirena on Av. Bartolome Colon on a Saturday
afternoon, walk up stairs where all of the bank machines are located and you will see a fella
with a stack of (debtor?s) ATM debit/ bank cards using them at different machines withdrawing money.
He carries a huge stack of cards and spends hours taking money (20% weekly) out of the machines.
 
D

Derfish

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I financed a car repair of 30,000 pesos at 10% quincenal. I paid monthly 3,700 pesos and after 22 months having missed 3 payments while in the USA and one while here I still owed 23,000 pesos last week when I took him the original paperwork and showed him where the vehicle is now sitting at a mechanic who will need 1,500 before he tows it away. Would never do such a loan in this country again! Nunca!
I did a lot of pawn shop business back in Florida. More than once I left out of town for a week end while 40 miles away from my shop and took some bulky tools to a pawn shop and borrowed $25. against them and picked them up Monday for $30.00 having in reality paid $5.00 to store my tools for the weekend!

Der Fish
 
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DOMINCAN JOE

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Aug 15, 2006
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cbmitch9 said:
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I have also known of individuals who took loans, skipped the country and never repaid the loans. Dirty but necessary business. Borrower and lender beware.
Click to expand...

TRUSTNOONE-1.jpg
 
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rfp

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Jul 5, 2010
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I lent money at different times with real estate as collateral. My best deal was a two year financing at 23 % annual paid monthly for 2 years for 2 million pesos. It was on a per property basis, not a fund and was fully vetted by a lawyer that I trust. It went well for everybody involved and the worst was having some late payments. Be careful, but you can set up some decent passive income on relatively small amounts of capital
 
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playacaribe2

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Jan 9, 2004
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rfp said:
I lent money at different times with real estate as collateral. My best deal was a two year financing at 23 % annual paid monthly for 2 years for 2 million pesos. It was on a per property basis, not a fund and was fully vetted by a lawyer that I trust. It went well for everybody involved and the worst was having some late payments. Be careful, but you can set up some decent passive income on relatively small amounts of capital
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Lots of so called micro loans being done for/by neighbors, friends, peer to peer, etc. The only problem is that many are not legal. Legal in the sense that the persons loaning do not have RNC numbers to give the government their due. That is the risk for the loan sharks. If a whistleblower goes to the authorities because they don't want to pay (it is rare, but happens) then your entire unpaid loan is at risk.

Again, that is why rates are where they are......default in some way by the debtor needs to be factored in.


Respectfully,
Playacaribe2
 
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PeterInBrat

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May 29, 2006
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The standard around here is if you borrow 5000 pesos, you pay 500/week for thirteen weeks. Mi esposa and her family charge this even between each other and last winter her sister borrowed 50,000 from us to put in a inverter system and other upgrades..paid it back right on time.

Another inlaw just borrowed 2000 for medical bills and left a laptop as collateral. We're not charging interest on that.

Mi esposa pawned our blender a few weeks back bc she didn't want to ask me for 1000 pesos. They charged her 100 pesos and I spent more on beer and batidas for ten days. We had *a little chat* about that. She can pawn the TV, but I need the blender..I'd rather she just ask.
 
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Derfish

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playacaribe2 said:
Lots of so called micro loans being done for/by neighbors, friends, peer to peer, etc. The only problem is that many are not legal. Legal in the sense that the persons loaning do not have RNC numbers to give the government their due. That is the risk for the loan sharks. If a whistleblower goes to the authorities because they don't want to pay (it is rare, but happens) then your entire unpaid loan is at risk.

Again, that is why rates are where they are......default in some way by the debtor needs to be factored in.


Respectfully,
Playacaribe2
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Default is why the person putting out the money holds the blender, the laptop or the papers on the car.
 
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