Embassy warns OFWs against ’5-6′ loans

The Philippine Embassy in Riyadh warned Filipinos in Saudi Arabia  against borrowing or guaranteeing money at usurious rates, colloquially called 5-6, as it is prohibited and is a criminal offense in the Kingdom.

The Embassy issued an advisory due to numerous requests for assistance from Filipinos. The Philippine Consulate General in Jeddah continuously receive complaints concerning the problems that these Filipinos, their family members, or friends encounter with regard to contracting loans or acting as guarantors for the loans of other individuals.

In a press release, the Embassy disclosed that to avoid being accused of usury, lenders have resorted to lending cash with the borrower signing a promissory note to pay installments with a total 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.

In almost all cases, a guarantor who would also be liable for payment of the total amount is required as the undertaking binds also the guarantor to the obligations of the borrower, the Embassy press statement said.

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 lender’s complaints, the Embassy continued.

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 strongly appeals to Filipinos to avoid engaging in these types of transactions to avoid serious problems in the Kingdom.