OFWs in Saudi warned vs '5-6' shark loans

Overseas Filipino workers (OFWs) in Saudi Arabia were warned against "5-6 loans" or lending or borrowing money at usurious rates, considered a criminal offense in the Kingdom. The Philippine Embassy in Saudi Arabia issued an advisory after receiving many requests for assistance from Filipinos who contract or act as guarantors for such loans. "The Embassy informs Filipinos that it is not authorized to guarantee the obligation and could not settle the amount demanded for the satisfaction of the loan, as this is the responsibility of the borrower and/or guarantor," the Embassy said, according to a news release of the Department of Foreign Affairs (DFA) said on Friday. Filipinos should avoid engaging in these types of transactions to avoid serious problems with the law in the Kingdom, the Embassy added. According to the Embassy, lenders seeking to avoid being accused of usury have resorted to lending cash with the borrower signing a promissory note to pay in installments. However, the total payments are greater than the amount of cash borrowed. "This practice comes in different forms, and sometimes the undertakings are for payment of installments for appliances or furniture or other items instead of cash," the DFA said. Most cases involve a guarantor who would be liable for payment of the total amount, as the undertaking binds the guarantor to the obligations of the borrower. "In case that the borrower defaults for any installment and the lender complains to the police, the borrower and/or guarantor are held accountable for this private rights case and face endless imprisonment until the amount is fully settled. Usually, the persons involved in the loan are detained due to the private rights complaints by the lender," the DFA said. - VVP, GMA News