Inaccessible to bank loans, people seek capital from the black market. However, the interest rates in the black credit market have also been increasing dramatically.

Cuong in Dan Phuong district in Hanoi said that he has borrowed 20 million dong from a familiar lender, and he has to pay 10,000 dong a day in interests for every one million dong worth of capital. Two months ago, the interest rates were just 2/3 of the current rates.

Tuan, the owner of a pawn shop on Lang Road in Dong Da district in Hanoi, said that the current interest rate applied to the loans of less than 100 million dong is 6000-7000 dong a day for every one million dong worth of loans (18-20 percent per month). The highest interest rate is 10,000 dong a day for every one million dong worth of loans, which is applied to the new borrowers. If borrowing from 100 million to 150 million dong, borrowers will have to pay 5000-6000 dong a day for every one million dong.

According to VnExpress, in suburb districts like Dan Phuong or Tu Liem, the daily lowest interest rate applied by pawn shops or professional lenders is 3000 dong a day now, while it was 2000 dong in the past. The highest interest rate is 10,000 dong a day, the same with the rate applied in the districts in the inner of the city, applied to those, who borrow money with no collaterals. Meanwhile, if having mortgaged assets for the loans, people would be able to borrow at 6000 dong a day.

The owner of a pawn shop on Ho Tung Mau street said that lenders now use their own capital and the capital mobilized from relatives to lend. He said it is very difficult to seek idle capital from sources to lend now, when all people and businesses are facing big economic difficulties.

Therefore, professional lenders now lack money to lend, and they have become more hesitant in lending, setting up stricter requirements on borrowers, while having raised the lending interest rates.

Hung, the owner of a pawn shop in Cau Giay district said that on May 23, a loyal client called and asked for a loan worth 300 million dong, which he will use to pay a matured debt to bank. However, Hung refused to lend money because he said he cannot arrange such a big sum of money.

When a client said on May 23, that he accepted the interest rate of 6000 dong a day for every one million dong worth loans, he told the client that he will only give money on June 10 at the soonest.

“Previously, when the capital was profuse, I could disburse money just one day after making necessary formalities,” he said.

He also said that previously, he could lend the sums of money valued at 80 percent of the values of the mortgaged assets, while the figure now just is equal to 70 percent.

Two weeks ago, a client, who called himself as the director of a private business, came and asked for a loan worth one billion dong, saying that he needed money to pay bank debt. The client said he will pay 4000 dong in interests a day for every one million dong worth of loan. Though the suggested interest rate was really good, Hung could not accept the proposal.

Hung said that many of his friends are now also thirsty for capital. Previously, when there were many lenders, they had to compete fiercely with each other to scramble for borrowers. Lenders had to establish associations where members introduce borrowers to each other. However, as there are too many borrowers now, lenders find it hard to satisfy the requirement for the loans worth hundreds of millions of dong.

Nguyen Van Hung, Deputy Director of the Hanoi Branch of the State Bank of Vietnam, said that when the people who have idle capital, lend the money to others, this is a kind of investment.

Though the interest rates are exorbitant high in the black credit market, the market still can attract many clients, because of the simple procedures and the short disbursement time. Banks are now lending at the interest rates of 22-25 percent on average, and sometimes at 27 percent. However, borrowers always have to follow very complicated procedures in order to borrow money, which discourages people. As a result, people would rather to access black sources when they need capital, than contacting banks.

C.V