Illegal loans legalised?

Categories: Wormie Says, Malaysia, Penang

Recently while in Penang and Ipoh, I noticed something that is very troubling. Pasted prominently on lamp posts, bus stops and walls are flyers advertising loans. What caught my eyes were the exorbitant interest charged.



One flyer advertised an interest of just RM30 for a loan of RM1000. This works out to be 3%. Trouble is the loan duration is not specified, and is highly unlikely that this represents a monthly interest. A hint at the actual monthly interest can be gathered if one read the small print which says the go-between gets a 2% commission. Further hints are provided by other flyers, with one having a monthly interest of 5%.

The most ridiculous must surely be this one (photo below). Here a 5% interest is chargable for a 3-day loan of RM5000. And this increases 3 times for a 10-day loan, or 45% per month or 540% per year! (As a contrast credit card company charges 24% interest per year.) Therefore, a RM5000 loan becomes RM5250 after 3 days; RM5750 after 10 days; RM7250 after 1 month and RM32000 after 1 year if the loan terms had not changed!! Only Bill Gates can afford this kind of interests. But then, if you are Bill Gates, there is no need to take such loan in the first place.

I cannot ascertain if such loans are legal or not. Friends and relatives give different answers. In a way, I hope these are flyers from loan sharks because at least an illegal activity is not being legalised. However, if these were illegal, why were such activities so blatantly advertised? Even their phone numbers can be prominently seen. There don't seem to be any attempt to be discrete; as if to torment the police.

If such loans are legal, then how can the authority allow such exorbitant interests to be charged? They are just legalised loan sharks! Their licences should be revoked and the people charged.
It is especially sad because the victims are usually people who are desparate for cash and has nowhere to turn to. Taking loans from these illegal or legalised loan sharks will only worsen their plight. They will just spiral deeper and deeper into poverty and become vulnerable to criminal activities. Hopefully the authorities will crack down on such activities soon, otherwise more and more lives will be ruined.