Borrowing Loans for Domestic Helpers

Working as a domestic helper in Hong Kong can get financially challenging. Some helpers would borrow money so that they can go and work in another country. However, some syndicates lurk around behind these money-borrowing centres.

On August 5, 2020, Hong Kong police were able to catch a loan shark syndicate preying over Filipino domestic workers. Yet the workers didn’t know that there’s a considerable interest behind it.

The syndicate had made HK$23 million between February 2019 and February 2020. It was reported that a hundred domestic helpers borrowed from the syndicate, not knowing that they’ll be given an excessive interest rate.

Chief Inspector of the narcotics bureau’s financial investigation team, Tang Hoi-ting, said that some Filipinos needed to pay around HK$6000 and spend all of their monthly wages on this.

Under the Money Lenders Ordinance, lending money above an annual interest rate of 60% carries a maximum penalty of 10 years in jail and a HK$5 million fine.

These are some other things you should know about borrowing money:

The debt cycle starts during recruitment. For those who just arrived in Hong Kong, they may already need to take loans because of very high fees that are charged during recruitment. These fees might include training, placement fees, etc.

There are a lot of money lenders that do not provide the same services as banks. They usually give out higher interest rates. Licensed money lenders target more domestic workers because they need more instant cash.

You have to watch out for these loan companies that make it simple for domestic workers to get a loan. They make it more appealing since the only needed documents are:

Copy of employment contract
Copy of Visa
Copy of passport
At times, they need to list references and guarantors as well

When you have a guarantor, they should understand why you’re making a loan and the responsibilities that go with it as they sign the contract. Setting monthly repayment can be secure through the bank, at the loan company, or even on 7/11.

When looking for a loan, make sure that you check the interest. Remember that borrowers can only be legally charged up to 48% of annual interest by licensed money lenders.

Some domestic workers resolve to “share” a loan with a friend where the other person agrees to be the principal borrower that will create an informal repayment agreement between 2 people. This is not an encouraging arrangement.

Avoid going to unlicensed money lenders because they might charge extremely high-interest rates and then ask you to provide a passport as collateral.

It’s understandable that sometimes, money is an issue when applying for another country. Make sure that you are getting from a licensed borrower, and you fully understand the terms.