Want to help?

I just read a very interesting article on microlending, which won a Nobel Prize a few years back.

The article says (to summarize) that this model has worked very well on the "social worker" level, but, if it is to really take off, it will need to become part of standard international finance. Well, here is the article:

http://www.slate.com/id/2200486/

Now, for a retired man living in Thailand, this sounds like it might become a golden opportunity to get involved with your local community and really do something to HELP. I guess you would need some training to do the job, but, if you're retired, you have plenty of time, right?

The thing which really interests me here is that I have been "playing" with microlending on a very small scale. A few loans have gone south, but the others have produced really visible results.

Anyhow, just an idea, just a suggestion.

[lo-so]

This is an irregular verb;

I do microlending

You are a money lender

They are bottom feeding loan sharks

You are a money lender

They are bottom feeding loan sharks

My guess is that you weren't saying that about your banker the last time you took out a car loan, or a mortgage, or didn't pay your credit card off in full. Hmm?

This is an irregular verb;

I do microlending

You are a money lender

They are bottom feeding loan sharks

Sure, I do microlending (at U.S. interest rates which may approach 7% API)

The loan sharks in Thailand charge at LEAST 5% per month. PER MONTH, lo-so.

And, for your additional information, Thailand has NOTHING approaching a Truth-in-Lending law. So you may go off (in your unspoiled innocence) and buy a new Toyota at "6% interest." BUT that means:

Vehicle price: 600,000
Less Down: 100,000
--------------------------
Amount Financed: 500,000
Interest Rate: 6%
Number of Years: 5
------------------------------
Interest charged = (Amount Financed * Interest Rate * Number of Years) = 30,000 * 5 = 150,000 baht.

If you put those figures into any financial calculator, they will tell you that the API is MUCH higher. Not only that, the people lending the money do not accept early payoffs, in many cases.

The numbers for motorcycles are MUCH WORSE. They range in the 30%.

So, if I offer a good friend or an employee a motorcycle loan at a TRUE API of 9%, they are getting a terrific bargain. In fact, if I offered them a true API of 20%, they'd still be better off.

So: I pick up a few baht which the Taxers do not see, and they get a very cheap loan.

Sounds like win-win to me.

Lending money at a fair rate of interest, for a reasonable purpose, to persons who can afford to pay it back is a perfectly honourable thing to do.

But look at all the conditionals there - particularly the last one. How many Thai farm boys do you know who have mastered budgetting? If you lend to friends, this will strain your relationship, and probably break it. If you lend to strangers, they won't be that bothered if they don't pay you back. Loan sharks break legs, legitimate Thai lenders have the courts on their side. What can you do if your clients don't pay you back?

Regard all loans as gifts, and any repayments as a nice bonus.

My policy when lending to friends is 'if you can't afford to lose it -don't lend it.'
This means I rarely lend.
I have also found that lending to friends will be the end of the friendship if they cannot/will not pay back.

[Lunchtime O'Booze]

microlending ?? is this something to do with Freddie Mac and Fannie May ??

I've been micro and maxi "lending" to Thai lads for decades !