A risky kind of loan called 5/6

[Starmix]

Some people apply for a loan called 5/6 because of an emergency need. They resort to an all the time approval by the lender. Some people indeed apply for 5/6 loans, and these loans carry significant risks. The 5/6 system is an informal lending practice common in the Philippines, where lenders charge a high –interest rate. For every $5 borrowed, the borrower must pay $6, which translates to a 20% interest rate.

The 20% interest rate is already very high, and it can sometimes go even higher, leading to a large repayment amount. 5/6 lenders are often unregistered and unregulated, meaning there is no governing body to oversee their practices or protect borrowers. The high interest rate can make it very difficult for borrowers to repay the loan, leading to financial distress and a cycle of debt. Some lenders may resort to harassment, intimidation, or even violence to collect payments.

Also, the borrowers cannot sue the lender, considering there is no formal agreement or paper trail, making disputes nearly impossible. The Ph government has introduced initiatives to provide fairer and more sustainable lending options, a program that offers microfinance solutions to small businesses with lower interest rates. The government also promotes licensed money lending to ensure fair practices and supports the various programs.

 

[gwolf666]

The practice of 5/6 lending in the Philippines is a stark example of how informality and a lack of regulation can leave people extremely vulnerable. Interest rates of 20%, which can be even higher in some cases, make it very difficult for borrowers to repay, creating a cycle of debt that can be very hard to break. Worst of all, these lenders are unregulated, so there is no legal protection for those trapped in these abusive practices, and in many cases, they resort to threats or even violence to collect. From my perspective, this is a serious problem that highlights the need for better regulation of the informal financial system and the provision of safer and fairer options for those in need of emergency financial assistance. I welcome the government's promotion of microfinance programs and licensed lending institutions, as these initiatives can make a real difference in the lives of many people and help prevent them from falling into these debt traps.

 

[Starmix]

This time only a very people engaged in this system of loaning which kills the borrowers. With the 20 % interest they might have a trail of debts. It may take them years to repay their loan. It's better to live frugally to have some savings and loaning will be discouraged.

 

[Suba]

In my country online loan platforms that do not have government permission are prohibited, so borrowers do not have to pay their debts. However, many parents take registered online loans even though they charge high interest.

 

[Augusta]

Some lenders may resort to harassment, intimidation, or even violence to collect payments.This is the one I do not like and It isn't ideal borrowing from.them

 

[Starmix]

In my country online loan platforms that do not have government permission are prohibited, so borrowers do not have to pay their debts. However, many parents take registered online loans even though they charge high interest.

Some people are hot-tempered on loans, and some of them apply to loan sharks, he he. That is the effect of financial greed despite no reason why loan .