Local struggles with loans

There is one negative about the lenders on VI. Some of the lenders know that the local community cannot survive without loans in some seasons of the year, so they have been intentionally increasing the interest rates of loans out of season, while increasing the overall length allowing them years to profit off those who may need the support.

The real worry about this practice isn’t the initial loan, or even the loan itself. It’s that they want the amount back over the space of 5 years. Most of the community would apply for a business loan that they want to pay off in the summer, because there is a real possibility that by the same time next year they will need to reapply.

When you start adding 5-year repayment lengths, you start trapping these customers into paying off loans and needing to take out additional loans while still paying the previous loans off. This staggers their debts horribly, and by year 5 it begins a cycle that means everyone has at least 5 loans looming over their heads at any one time.

Because most of these loans are secured against their homes or businesses, there is a real risk these people become homeless and the lenders start taking their properties to sell to those who do not live in the Island. We have been discussing this issue for several months now, and it looks like it will only get worse.

While we are vehemently against this practice, the truth is the other lenders continue to take advantage of it. They won’t stop, and the ones who haven’t done it yet are going to start. They know that the other lenders will not put an end to this practice, and it will cause a landslide of terrible loan practices across the island. It will become an issue, and it needs to be stopped before it gets any worse than it already is.

Leave a comment

Your email address will not be published. Required fields are marked *