The recent rise in ‘black credit’ has trapped individuals and families in big cities of Hanoi and HCM City as well as other provinces. When approaching this source of funds, most borrowers fall into the high interest trap and ‘forest law’ constraints.


This form of lending has been flourishing in HCM City and neighbouring provinces such as Dong Nai, Binh Duong and Long An, reported Đời Sống và Pháp Luật (Life and Law) newspaper.

Notably, the high-interest loans were offered from financial companies, the paper said.

Simple procedures, quick disbursement

Understanding the desperate situation of those who need loans, a number of loan sharks have sprung up around the country. When signing up for these loan agreements, the debtors agree to many unfavourable conditions.

The newspaper’s investigations have discovered variety of tricks employed by loan sharks.

Posters advertising loans without collateral and simple procedures appeared on walls and electricity poles around cities.

In Hanoi, on streets such as Hoe Nhai, Ta Quang Buu, Yen Phu or De La Thanh, people were easily lured by leaflets on electrical cabinets and poles.

Reading the posters, it seemed that borrowing money had never been so easy.

According to these ads, people just need to show their residential registration books and IDs to get a loan of between VND10 million (US$430) and VND100 million ($4,300) if the borrower had a house. Money would then be disbursed in just 15 minutes.

The procedures were simple and fast. And lenders would even send their staff to borrowers’ homes to collect interest periodically.

These simple procedures have attracted poor people who did not have collateral, which is required by banks to get loans.

Generally, borrowers of ‘black credit’ have to pay daily interest with super-high rates.

According to the paper’s investigation, on a VND50 million ($2,200) loan over 40 days, the borrower had to pay an interest of VND1.5 million ($65) a day. This means the interest rate is about 30 per cent per month or 1 per cent per day.

A loan shark in Go Vap District of HCM City has applied a cut-throat interest rate of 500 per cent per year for a VND100 million loan.

As per regulations in the Civil Code in 2015, loan interest could not exceed 20 per cent per year.


A man reading leaflets offering immediate loans, which have pushed many people into misery.

Besides the super-high interest rates, loan sharks collected a fee called fast money service.

It means if a person takes out a loan of VND10 million, he or she would receive VND9 million after being deducted VND1 million, or 10 per cent, as a fee. However, the interest rate is still levied on VND10 million.

This fee varies depending on different loans.

"When I was not able to pay the interest, I asked them to let me pay the principal to deduct daily interest but they refused,” said a man named Hung, a resident in Tan Phu District.

"As such, the debt was swelling day by day. I had to sell my house but also could not pay off all debts,” said Hung.

The loan sharks have appeared everywhere and they were willing to lend without collateral and then profit from the poor, the paper said.

"After just a few days without paying, interest-on-interest would rise,” said Nguyen Huy Khang, a resident in HCM City’s District 12.

"At that time, gangsters and thugs would come to houses to threaten debtors by spraying paint, shrimp sauce or faeces on their homes. Even beating family members,” he said.

"It was a living hell,” he added.

Tricks

‘Black credit’ is available at a number of places, including pawn shops.

The service employed several kinds of tricks to appropriate the mortgage properties of borrowers.

In Hanoi and HCM City, there are thousands of pawn shops with attractive marketing.

Along with high interest rates, most pawn shops offer short term pawns ranging from one to two weeks.

"This was the way to ‘kill’ the borrowers quickly,” said Nam, who used to work in a pawn shop.

"Because in one or two weeks, most customers would not have money to redeem the pawned items, while the interest would rise,” Nam said.

Therefore, many borrowers lost or spent more money to take back the property, he said.

In Hanoi and HCM City, thousands of pawn businesses accept assets of unknown origin or stolen items.

Recently, authorities have cracked down on many ‘black credit’ entities.

Over the past five years, Ha Noi Police have wiped out 54 gangs involved in this type of activity.

Last month, the police dismantled the biggest loan shark - Nam Long Finance Company.

The company has 26 branches nationwide and was offering loans with yearly interest rates of more than 100 per cent, with some at 1,000 per cent. When borrowers are late in paying the interest, they will be threatened, harassed, assaulted and have their properties stolen by the company’s employees.

More than 200 people across Vietnam have been trapped by the loan shark, with total loans worth more than VND510 billion ($22 million).

Ha Noi People’s Committee has recently asked relevant offices to halt granting licences to pawn shops and financial service businesses which were actually loan sharks so as to reduce criminal cases in the city.

 

Source: VNA


Related Topics


Hoa Binh enhances awareness of "Safe and happy school" Project

The Department of Education and Training of Hoa Binh province held a conference on March 18 to review the performance of the "Safe and Happy School" Project and set out tasks for 2025. The project, funded by the Taiwan Fund for Children and Families (TFCF), aims to create a safe, inclusive, and supportive learning environment for students. The event saw the attendance of representatives from the TFCF and 26 beneficiary schools.

Industrial zone trade unions enhance support for female workers

With over 70% of their workers being women, trade unions across industrial parks (IPs) in Hoa Binh have been actively safeguarding their legal rights and interests while implementing initiatives to improve their income and well-being.

Provincial General Hospital innovate to better medical check-ups, examination

In recent years, the Hoa Binh provincial General Hospital has continuously innovated itself and improved the quality of medical services to meet the increasing needs of local people. With substantial investments in infrastructure and modern equipment, along with a team of highly qualified doctors and nurses, the hospital has gradually established itself as one of the leading medical units in the Northwestern region and a trusted destination for healthcare for people inside and outside the province.

Le Van Tam Primary School’s programming club shines on national stage

From mastering the fundamentals of programming to achieving national recognition, the Programming Club of the Le Van Tam Primary School (STAR LVT28) in Hoa Binh city has made remarkable strides in the field of robotics.

Hoa Binh youth launch “digital literacy” team

The Ho Chi Minh Communist Youth Union Committee and the Vietnam Youth Federation chapter of Hoa Binh province organised a programme on March 12 to launch the "Digital Literacy" movement and an online quiz on the resolutions of the Vietnam Youth Federation congresses at all levels, as well as the Politburo's Resolution No. 57-NQ/TW on breakthroughs in the development of science, technology, innovation, and national digital transformation.

Sustainable forest development tied to environmental protection

As climate change grows more unpredictable, the development of production forests has become essential - not just for economic growth, but for safeguarding the environment and maintaining ecosystem balance. By boosting local incomes, curbing natural disasters, preventing soil erosion, and protecting water resources, these forests play a crucial role in sustainable development.