"Uncle Jan" in Thailand
Maybe you have an Uncle Jan, who once met holiday in Thailand but that's not what this story is about. This Uncle Jan doesn't even really exist, so doesn't know Thailand either, because it's a pet name for the pawnshop, better and officially said, the Bank of Loan.
That was - because I don't think it still exists - a mostly municipal institution, where you could borrow money with "movable property", such as (gold) jewellery, rings, books, kitchen utensils and things like that as collateral. Of course you never got the real value as a loan, because if you didn't pay off the loan - with interest - the pawnbroker had to sell the stuff. Of course people didn't want to know for the neighborhood and family that they were sitting on black seed and borrowing money, so it was usually, if it came up at all, talked about "Uncle Jan".
Pawnshop
In Thailand, the pawnshop (English: pawnshop, Thai: rong kana) is still common. Here in Pattaya I know about 10, so there must be hundreds all over the country. Sometimes a small shop, but I also see large shops, which have the loaned TV's, computers, fitness equipment, etc. for sale outside and then offer the large assortment of rings, amulets, mobile phones, gold and much more inside for sale. Not everyone is able to repay the borrowed money and after a certain period the collateral is then sold.
I've dealt with it sideways myself. In our first acquaintance period I sometimes gave my Thai wife some money and then she went with me to it hotels went a bit more, but it wasn't really much. I barely knew her and knew nothing about her “financial situation”. Well, that last one wasn't good, read my story”A girl from Isan” of November 6, 2010 again, then you know what I mean.
Pawn shop
I called her every day from the Netherlands, usually in the morning on my way to work from the car (stood in a traffic jam on the A9 anyway). I called her once, just before I was due to go back to Thailand, but got no answer. I tried a few more times that day and then again the next day, but alas, no connection. I was worried, does she not want to talk to me anymore, would she still work in that bar, I didn't even know where she lived. Well, right after arriving in the evening to the bar and luckily, she was just working there. I asked about the phone, but didn't get a straight answer, even though her English wasn't exactly good. The next day she asked me if I wanted to walk with her to a store where she had to pick up “something” and that turned out to be a pawn shop. She had no money and the rent of the meager room was still due, so she had borrowed her cheap cell phone and a family-owned amulet to get through the days until my arrival. I was allowed to pay back the borrowed money, it was the first time she asked me for money.
Gold stores
There is another option in Thailand to borrow money for a short time. That happened to me a few years later. My wife wanted to start a shop and I didn't like it at all. She didn't have to work, she just wanted to have something to do. I continued to resist the idea, we got into quite a few words about it, but she was stubborn(?) and persistent and said that if I didn't want to help her with money, she would find another way to get money. And sure enough, she found a nice place for that shop and when I first came there, there was also a large double fridge with beer, soft drinks, etc.
The shop became a success, she soon had a large number of regular customers and sales were and are still going well. I started to get used to the idea and gradually I reconciled myself to the idea. When I then asked her how on earth she had gotten the money, it turned out that she had borrowed all her gold, most of which I had given her, at one of the many gold shops in the area. With a few sweet words (and a bit more) she managed to get me over the bridge with money, so that she could “buy back” the gold.
Trouble
I had to think of those two incidents when reading all the misery surrounding those floods. Many families have lost everything, no work and therefore hardly able to pay the daily costs. The “Uncle Jan's” in those areas will do good business, because there is always something of value that can be borrowed. Those people still have to provide for their daily maintenance, so let's temporarily get rid of family jewellery, rings, watches, etc. A bank will not lend them that money and a “loanshark” is much too expensive.
It will be many years before anecdotes are told in Thailand about “Uncle Jan” as we know them from the mostly Amsterdam working-class neighborhoods.
– Reposted article –
FYI: 'Uncle Jan' still exists, at least in Amsterdam, see Stadsbank van Lening. Website: http://www.sbl.nl
@Nico: you are right. I wrote down the story spontaneously and did not check whether Uncle Jan still existed.
There is indeed another Bank van Lening in Amsterdam and another one in The Hague. Both municipal institutions operate on a non-profit basis.
What is much more common are the private pawnshops, which work with the same principle, but where the (interest) costs are of course considerably higher. You should actually compare the private individuals with the pawnshops in Thailand, because they are also commercial.
That's right and it's widely used. My Thai girlfriend also knew what to do with it. but I did manage to do that. the interest charged is exhorbitant.
just like those finance companies here in Thailand. as long as you say that you will pay back “from your salary” (it is never checked how much that is) you can get everything financed. at an interest rate of > 20%! those companies destroy people, because that kind of interest is almost impossible to afford and especially not if and the TV and the refrigerator and the sound system ....etc.. are also financed. I know people who earn as much as their financing costs! well, no wonder Thais run away from their problems.
high time for a kind of BKR (credit registration agency) and therefore protection of people against themselves and the NIMs etc. of Thailand.
they have a kind of bkr here. It's called NCB national credit bureau. If you are registered there, you cannot take out financing. After payment you will remain registered for another 3 years
nice article…so nice that I suggested it to my wife/girlfriend.
We have known each other for 6 years and visit each other regularly.
So there is mutual trust… which is of course important when working with money. Definitely going to work on it….nice article…nice idea…at least for Thailand.
What you write is partly true for small amounts of money 3 years and large amounts 10 years. after that, direct debit is no longer possible. BUT the debt remains.
You can't be bothered anymore. But if there is a judgment, you can collect up to a maximum of 20 years.
There is a verdict .. have not received the documents yet .... that after 1 1/2 years the right of recourse expires. M curious
When I had a kind of betrothal ceremony in the village of my tarak (the well-known old sage who says a prayer while your partner, you and other important members hold a rope attached to an offering basket) we also received money from the guests.
I had already put the money we got in my wallet, but I had to take those notes out again. I was absolutely not allowed to spend that because this is a special gift, so that money went to the Netherlands where the bahtjes got a nice place in the display case. She also prefers not to sell our first gold rings, but if it is really necessary it is allowed. Fine, then we'll just keep everything. So that emotional connection (or lack thereof) must also be a matter of personality (and generation??).
More on topic: my girlfriend doesn't want to borrow money either, at least not from agencies (sometimes from friends, but more often from her). She did that once, she said to buy a new phone and then she kept getting calls about whether she still wanted to borrow money, etc. From some acquaintances she also knows the stories about major problems due to borrowing too much or having to pay a lot of interest. so she really doesn't want to go into debt. So financially I don't have to worry about all kinds of unwise loans being taken out. I will stick to personality, in the Netherlands there are also enough people who buy a car or something expensive on installment…
Pledge of property and borrowing money is a big problem in Thailand and will only get bigger.
Goods are offered against payment in almost every shop; even stores like Lotus and BigC are participating. This makes buying goods easy and stimulates, especially since any check on income is often omitted. There is indeed the NCB, say the Thai BKR, but it is rarely consulted for "small" purchases.
It is even easier at car dealers (not brand dealers), there you can buy a car without any income test, after all they have good collateral. Many of these loans are placed with small financing companies, but also with the Thanachart Bank, say the Thai DSB Bank; a fairly large institution, but here too no income is looked at or a credit check is done. Selling is the most important! Collecting the first months is already a profit. In the event of non-payment, the car will be taken back and put up for sale for the same amount.
Once something is bought on credit, however, the problems quickly start; one cannot afford the monthly expenses and then soon falls into the hands of the well-known money loan sharks. You also have gradations in this. You have the small financing companies and they almost all charge 1,25% p/mth, so 15% p/yr. If you have come into discredit there, there are always the illegal companies and they charge percentages of 10 – 15% p / month, so 100 to 180% p / year or sometimes more. The repayment is collected daily by the men on the motorcycles that you see driving around all over Thailand: 2 men, mostly wearing black jackets, black gloves and an intimidating integral helmet. These men receive a percentage of the collected amount and are therefore not afraid to act intimidating or sometimes even to threaten with physical violence. Once you end up in this last circuit, there is no turning back and the situation will only become more hopeless with time. Many people who ended up here; mostly the people who already have little or nothing; end up running from their creditors.
Many small farmers also lose their land and thus their income in this way. They often pledge their land to the Coop to which they are affiliated and in doing so also immediately pledge their harvest. Once a year, the Coop collects money, usually with the proceeds of the harvest immediately disappearing into the Coop's greenhouse. To get out of this apparently hopeless situation of several years, people often end up with louge, often illegal financing companies. Due to the increased / rising land prices, people can borrow more money there to pay off the Coop and still have some pocket money left for themselves. Deposit is, of course, the ground. Here you often get 50% of the actual value and then a percentage is often also withheld as a kind of deposit for the repayment. This often results in no more than 40% of the actual value. These companies often charge between 2 and 3% p / month and then an amount for repayment. It often turns out that the pocket money quickly disappears into the pockets of the finance company and that people are then at the mercy of the gods. Result: land belongs to the finance company and can be leased annually by the former owner.
Little is done about this black circuit because many (local) politicians and senior officials also have the necessary milk to crumble here and in this way further expand their wealth.
One point;
A car is also easily sold on credit, because that is 'good collateral'? And what if that thing is driven 'in the prawn cracker'?
Not an unrealistic view of traffic in Thailand.
But indeed one must take action, because this borrowing thing is getting out of hand.
And I just think Americans sort of floated on credit.
Somewhat strange, because a Thai has to do everything new! to have??
Example, a telephone ... but with all the trimmings?
Which is never used because they don't use the internet?
This is to poke someone's eyes out, from look at me??
Same with fireworks?
People with little money pop the most'??
And have loans up to their ears?
No Willem, Bacchus is not my real name. But what's in a name?
I live in Isaan myself and regularly see the misery I have described around me. Sometimes in and in sad cases. Children who cannot go to school because there is no money; money goes to the loan sharks. People who go into hiding to escape the loan sharks.
The people that this happens to have generally little education and arithmetic is a big problem in Thailand. People often fail to see the consequences of their actions. 3 Baht interest (= 3%) p / month seems little, but you pay back the borrowed capital in the form of interest in less than 3 years and of course also the loan itself.
The problem here in the region is also the exhorbitant rise in land prices here in the region. Some plots of land were still selling for 50.000 baht per rai a few years ago and are now doing 500.000 baht+! Farmers have now often pledged their land to the Coop for 30 or 40.000 baht per rai. If you want to borrow more, you must first pay off the debt. Loan lenders capitalize on this and offer amounts of, for example, 150.000 baht per rai. A farmer with, for example, 8 rai immediately counts himself rich; 8 X 150.000 is still 1.200.000 baht. The loan shark relieves the Coop; say 8 X 40.000 baht in this example, and pocket the chanot. The farmer receives the remainder minus 20% as a deposit for the repayment, so 640.000 baht. It is said that she will receive the deposit of 240.000 baht if the loan is paid off in full. However, it often does not come to that. The loans often have a term of 4 years at 3% interest per month; the farmer must therefore pay 36.000 baht monthly in interest and 25.000 baht in repayment, a total of 61.000 baht! The 640.000 baht they received is usually used up after 10 months and the land reverts to the loan shark. Follow-up: farmer may lease "his" land for 5.000 baht per month.
You should take a look at the land office (Thai land register), there are plenty of these dark figures walking around. They pick out the farmers in no time and are often helped by officials at the land office. People often go to the land office with the chanot for a valuation report. A valuation report is often required to be able to lend or sell land. The official behind the counter informs the loan sharks outside that someone has come again for an appraisal report. Once outside, the farmer is attacked with beautiful words and promises by these louge figures. A lot is promised and you can (almost) always receive cash that same day, as long as you sign. You then have to be strong in your shoes/slippers not to tack, and that is difficult if you need money and cannot count!
Through this kind of mafia practices, a lot of land is transferred to people who take advantage of the needs of others and enrich themselves considerably in this way. Unfortunately, little is done about this kind of practice, also because behind the scenes many influential figures are pulling the strings.
The sad thing is that it is precisely the people who already have little or nothing that fall victim to this kind of practice. Sad!
Willem, there is no point in helping financially, because that is carrying water to the sea. In the past we have sometimes helped by repaying small loans from loan sharks, however, as soon as something in the house or the moped breaks down, these gentlemen are immediately at the door with a "suitable" solution. It seems well established in Thailand!
A Hindustani rides through our village on a moped who literally has everything for sale; clothing, mobile phones, radios, televisions and what he does not have, one may ask. A friend of ours bought a mobile phone from him. At Lotus that thing costs 1.500 baht, with him she pays 3.500 baht; of course on payment. She pays 50 baht every day. She does not know what she ultimately pays for her telephone. She only knows that she has to pay 50 baht a day. When we ask her why she does that, the answer is simple: she doesn't have 1.500 baht to just buy that thing at Lotus. In fact, she doesn't know what such a thing costs in a normal store, because she rarely if ever goes there. Clever people make clever use of this ignorance. Or is it stupidity?
Number of pawnshops in Philippines is ten times that of Thailand. Every shopping street has at least one pawn shop. Pawn shops in the Philippines operate within the law with a reasonable supply of cash against the value of the collateral and do not work with a middleman. Businesses like L'Huiller have a good reputation and prestige.
The land of the free man… it will be a great improvement if education ever gets to a good level because this problem persists due to a lack of knowledge and understanding.
For many people (who occupy a higher position) that is only good. I call it the exploitation of “the common man” (but it also includes common women).
The people are kept stupid and I will see these stories appear on this site in 20 years. I am very sorry.