Lending money investment

[Garpo]

I am looking at different investment options and one that has my attention is investing in company that does micro lending to Filipino\'s.  Not the bombay 6-5 but not far from it either.  I have read about the problems with trying to lend money yourself or even with the use of Filipino family and friends. That is not what I am talking about.  What I am looking at is a company that I invest my money in and they are the ones that find the borrowers and make the decision on who to and who not to lend to.  They also require different types of collateral.  Has anybody had any experience with anything like this?

[GregW]

Garpo here is an old thread on micro lending. 

http://livinginthephilippines.com/forum/index.php/topic,499.0.html

[fred]

I am looking at different investment options and one that has my attention is investing in company that does micro lending to Filipino\'s.  Not the bombay 6-5 but not far from it either.  I have read about the problems with trying to lend money yourself or even with the use of Filipino family and friends. That is not what I am talking about.  What I am looking at is a company that I invest my money in and they are the ones that find the borrowers and make the decision on who to and who not to lend to.  They also require different types of collateral.  Has anybody had any experience with anything like this?

The only organisations that I can think of that were involved in micro lending that just about anyone can invest in with high interest rates are (were) local rural banks..
It turned out to be just another huge pyramid scheme with 1000`s being burnt big time..
I understand that the PDIC have paid back most of the money to people with valid accounts but I doubt very much they would ever trust such an organisation again.
Please be extremely careful when investing in this kind of micro lending company or organisation.. Just MHO..

[rdjlazo@yahoo.com]

When it comes to lending as a part or full time business
you have to feel what is going on in that investment.
What I am seeing now is wide area of investing such as
1. Lending on vacant  land as mortgage. Most people tell me
they charge 4% and up per month. You should know about land title ins and outs
and real ones and not. Ca be done with little research.
2. Loaning on cars and motor cycles also about the same interest rates as lending on
vacant land.
3. Personal loan 5 to 20 thousand payable in few months. 5% interest per month and up.
Real estate and car loans is more secured because of the cars and land collateral.

If you are a foreigner it will not be easy for you to operate it by your self. It will be harder
if you will trust other people to invest it for you unless he or she is a real real close
local relative or spouse. It will not take long before you know almost everything in lending.

One thing I am looking at is agri lending or investing. I invested 14,000 pesos in watermelon
plantation and it look like my money will double  or more in about 4 months due 2nd week of may.
Look into this kind of investing if you are in a rural or semi rural area with the right people of course.
Good luck to you all.

[fred]

Im pretty sure that the issuer of a bouncing check here can be in serious trouble if duly reported or a case filed..

[Steve & Myrlita]

Im pretty sure that the issuer of a bouncing check here can be in serious trouble if duly reported or a case filed..

I won\'t matter. Nothing will happen to her. A foreigner will never get a conviction on a Filipino. The court would never allow them to lose face to a foreigner. God Bless...

[Lunkan]

When it comes to lending as a part or full time business
you have to feel what is going on in that investment.
What I am seeing now is wide area of investing such as
1. Lending on vacant  land as mortgage. Most people tell me
they charge 4% and up per month. You should know about land title ins and outs
and real ones and not. Ca be done with little research.
-cut-

Don\'t RP have any law against usury?

Here in Sweden for loans with estate as security 4 % is more suiting PER YEAR...
Some higher interest than that is fair in RP because of
/RP has higher inflation.
/if it\'s only for shorter periods, making it more handling work.
And lack of investment money make it fair to have SOME extra prophit,
BUT 12 x 4 = 48 % interest per year, when there are SECURITY, in my eyes is usury...   

Tempting to go into such business (with a lower interest to be much more fair)
BUT wouldn\'t established loan sharks become dangerously violent, if they get such competition putting them out of business for the secured loans? ...   

[rdjlazo@yahoo.com]

I was thinking as you are when I got there last August 2011. I am feeling guilty then as now
but talking to people they are telling me 3 to 4 % per month is more common than not.
And lenders are sometime hard to find. Having security like real estate doesn\'t mean
you are secured. There is always a risk but the more you know about risk and how
to prevent and avoid it the better for your business. If I will start a business lending
in real estate nothing more that 200,000 per loan and nothing longer than 6 months
and get a good lawyer to lower your risk. He will explain things to you and you will learn fast.
If 4 % is too usurious for you you can charge 2 or 3 % per month but remember risk. 3 or 4 %
is not all profit because of risk and legal cost sometime.
Look at this way. When you send money by LBC or Western Union they charge close to 2 to 3 %
by just facilitating the transfer of money and no risk what so ever on their part and same day
service not one month. Philippine banks
charge 36% plus annual membership on credit cards. Banks charge merchants 2 to 3 % for merchants for
using credit cards on purchases by card holders. 
Try to learn as much as you can as fast as you can and talk to people specially good
lawyers to feel the market. Best regards,
Rudy

[rdjlazo@yahoo.com]

Is there a usury law? Yes there is but hardly talk about and I don\'t see anybody
being prosecuted on it>

Loan sharks can be violent to eliminate competition?

You can do it in low profile by letting lawyer, relatives or agents handle the negotiation.
You only sign when everything is ready to go. Borrowers or borrowers representative
don\'t have to be there when you sign. Agents commission and lawyers fee can be paid by the
borrowers. Lawyers can verify, check and investigate title and ownership before you see
any document. Good lawyers have good connections in the community to assist in time of needs.
Best regards,
Rudy

[Lunkan]

Thank you. I hadn\'t thought of having such business, but if it isn\'t to risky - concerning loan sharks actions - then it perhaps can be a good combination of investment/work income for myself, and assisting people around to get some lower cost capital to improve THEIR businesses.
E g such as
a farmer can afford to keep seeds for planting, instead of first selling when the price is lowest and have to buy seeds expensive when they need them for planting
a \"industry\" producer can buy better equipment so he can produce much faster...

But what\'s good with having only short time loans on estates??
I mean except it\'s normal with higher interests then 
Switching borrowers often is much more work checking things, instead of have long time loans and they pay a bit back and interest regular/follow when they get income.

Oh the Spell Check say I didn\'t made any spelling errors !   Sad there are no Grammer Check function too   

[richardsinger]

But what\'s good with having only short time loans on estates??
I mean except it\'s normal with higher interests then  
Switching borrowers often is much more work checking things, instead of have long time loans and they pay a bit back and interest regular/follow when they get income.

Oh the Spell Check say I didn\'t made any spelling errors !   Sad there are no Grammer Check function too  

I would think longer tem loans carry much higher risk of default. That\'s why the rates are usually higher.

Regarding grammar checking, you could compose your messages in Microsoft Word and then copy/paste the text after grammar checking. I wouldn\'t mention it except you did first, but your sentence construction is very irregular and sometimes (not always) difficult to follow. For example, \"and they pay a bit back and interest regular/follow\" is not very clear to me.

And did you spell check \"Grammer\"?

Richard

[rdjlazo@yahoo.com]

I like 3 to six months loans  because you have more control of your money.
You can also charge processing fee so your interest rate can be higher considering there
is processing fee and it\'s normal procedure. Some of your borrowers might not
have any intention of paying back. The reason why I don\'t know but it happen a lot.
When you loan on real estate you also want to know about the real estate
you are making loans on. As I learned when you do it this way you are on
win win situation. You win  if the pay and win when they let you foreclose and
end up owning the property. Making loans on real estate is like buying that real estate because
you can end up owning it if borrower don\'t pay. So marketability and value
of the real estate you are lending on as collateral is as important.
Risk is your major enemy in this business so be very very particular and
know your risk getting in and out and you will know this as you go on. Experience is your
best teacher so hopefully you don\'t learn the hard way.

I like your idea of lending crop loans for about 3 to 4 months to the right people.
Do it cautiously and slowly until you know enough the risk and the people. I am thinking
about that too to help the very very poor in the community.
Best regards,

Rudy

[BingColin]

We had friends in the UK who used to lend money to Filipinos near their property in northern Luzon. These neighbours wanted the money for expensive weddings etc. Most of these people were poor farmers and it was obvious that they would be unable to repay the loan. Personally, I think it is immoral to obtain property in this way. People are foolish to obtain loans this way, but it is down to the pressure of \'keeping up with the Jones\'s \' This happens in everywhere, you just need to look at all the recent repossessions in other countries where people are living way beyond there means. If these poor farmers lose there land, it is not only the income it brings, but also their food supply.

I think it unwise to lend to anybody here, with or without security, and to never become involved in a loan business.

Colin

[rdjlazo@yahoo.com]

Sad to hear never to loan money here.
Banks, rural banks, cooperatives, KIVA, Grameen banks banks loan money
to the very poor to help out lessen poverty. I read Mohammad Yunus book
on how and why he started lending money to the very poor in Bangladesh.
Google KIVA and Grameen bank and learn how they loan money to help
out the very very poor.
Sorry if I offend those who don\'t believe in lending money as a business.
If i buy a car for 200,000pesos and sold it for 300,000  andprofited 100,000 p
I am called a good trader. Why will it be very wrong to loan money and
make some profit as long as the borrower can use the money to worthy
cause such as use it in small business or buy seeds and or equipment
for use in his business. Not all loan transaction are evil and not all lender
are usurers. What is customary interest rate in other country can be different
in the Philippines. In my humble opinion.

[Lunkan]

We had friends in the UK who used to lend money to Filipinos near their property in northern Luzon. These neighbours wanted the money for expensive weddings etc. Most of these people were poor farmers and it was obvious that they would be unable to repay the loan. Personally, I think it is immoral to obtain property in this way. People are foolish to obtain loans this way, but it is down to the pressure of \'keeping up with the Jones\'s \' This happens in everywhere, you just need to look at all the recent repossessions in other countries where people are living way beyond there means. If these poor farmers lose there land, it is not only the income it brings, but also their food supply.

I think it unwise to lend to anybody here, with or without security, and to never become involved in a loan business.

Colin

I would never give any loans to such things as weddings, which instead if income would add costs (=children)   
It would be to INVESTMENTS, which I believe have chance to add INCOME/reduce costs for them.

Surely not to \"luxury\" living costs,
but it would be very hard for me to say No to food to starving people or if they need medical care urgent, which make a big risk I would be out of business if I start a loaning business, so I probably better stay out of it     except if I will do voluntary work with Microloans for some such organisation. And \"seed/plant\" loans where they don\'t get any cash as loans.