Illegal “trap loans” have resulted in suicides among dozens of borrowers due to unbearable debt collection pressure and interest rates of over 5,000 percent, according to a CCTV News documentary.
In the documentary released on Saturday, a criminal gang and its illegal lending activities in Lanzhou, northwest China’s Gansu Province, prompted 89 borrowers to end their lives after being repeatedly harassed by creditors. At least 390,000 victims have also been implicated in the “trick loans”.
The annual interest rate on the loans stood at 5,214.29%, a rate that can “easily destroy borrowers,” according to the documentary.
The idea behind loans is that it is almost impossible for borrowers to repay them in full, thus trapping them in continuous payments.
If the borrowers cannot repay the debt, the organization uses texts and messages to insult and threaten the borrowers, and sometimes they are threatened in person.
“I have to make payments every day and I can’t take it anymore” – these are the last words of a victim who left a suicide message for her parents in a video, according to Saturday’s documentary.
According to the documentary, the loan amount reached 6.273 billion yuan ($ 900 million), with a profit of more than 2.8 billion yuan ($ 400 million) for this criminal gang.
Gang leader Wang Tao was sentenced to life imprisonment by the Lanzhou Intermediate People’s Court in September 2020, and 18 other gang members were sentenced to terms of five to 20 years.