Micro-credit chaos

• Source: Global Times
• [00:09 July 22 2009]
• Comments

By Guo Lu

An account manager (right) at ZhongAn Credit negotiates the terms of a micro loan with a potential client.Photo: CFP

Without a micro-credit loan of 500,000 yuan ($73,000), Wang Xiufeng, a white collar in Shenzhen whose annual salary is no more than 80,000 yuan ($12,000), would have never been able to buy an apartment in the city’s bustling central business district.

Her apartment is situated near the Guomao subway station in the Luohu district, where the average housing price soared to 12,000 yuan ($1,756) per square meter since last year.

“I applied for a mortgage loan from a bank. After a down payment of 104,000 yuan ($15,000), I was granted a mortgage of 520,000 yuan ($76,000) with a 30-year term,” Wang told the Global Times.

Wang said she wanted to pay the mortgage off sooner.

“Later a micro-credit company turned up and told me that they could offer me 500,000 yuan and they didn’t need any guarantee. I only had to provide proof of my financial status,” she said.

“I showed proof of my salary and other assets to the company and they lent me the money with no more questions. I used the money to pay back the 520,000 yuan ($76,000) mortgage from the bank,” Wang explained.

She borrowed the money from the micro-credit company in June at a 3 percent monthly interest rate and is expected to pay it back within one year.

Wang said she is depending on her wealthy boyfriend to make the payments.