SEC Speaks on Online Cash Loans Interest Rate, Terms between Lender and Borrower
ONLINE CASH LOANS – The Securities and Exchange Commission (SEC) confirmed that there is no cap on the interest rate that online lenders may implement under their offers.
Nowadays, banks and lending companies with physical offices are not the sole options of people who are in need of access to extra funds. Are you one of the individuals who have come across the online lenders?
You might be familiar with online lenders such as Tala, JuanHand, and Finbro. They are just some of the loan providers that offer online cash loans. You do not to go anywhere so you can make your application in hitting a chance of access to the funds that you need.
However, it is important to know that checking the terms in applying for online cash loans is really important. Aside from it will help prevent you from making transactions with lenders that are not reputable, checking the details will provide you with how the amount you borrowed may grow through the interest rate implemented by the lender.
Recently, the Senate Committee on Games and Amusement held a hearing and it was confirmed that there is no existing cap as to the interest rates that lenders may implemented under the online cash loans. Based on a report on ABS-CBN News, it was confirmed by no other than the Securities and Exchange Commission.
Senate Majority Leader Juan Miguel “Migz” Zubiri asked about the existence of the cap with regards to the interest rates for the online cash loans. He also asked if there is no law that impose limits on the interest rates for online cash loan offers.
“Ibig mong sabihin wala po tayong cap? So kung meron po kayong lending app, application, na-grant po, pwede po silang magcharge up to 20 percent a week? Wala po pala tayong batas para po diyan?” Zubiri said.
SEC counsel Atty. Romarie Abrazaldo answered that, “unfortunately”, there is no cap on the interest rate for online cash loans and the lender may even charge up to 20% per week. According to the lawyer, loan transactions are covered by the civil law, thus, the agreement between the lender and the borrower prevails.
Based on the report, Sen. Migz Zubiri cited that many people do not understand the contract when they apply for a cash loan online. The Senator also raised that the Supreme Court said a 3% interest rate per month is ‘already conscionable’.
“For the court to actually rule on the unconscionability or the high interest rates, I think a certain borrower would have to go to the court together with their loan documents and present it to the court,” the SEC counsel explained.
According to Atty. Romarie Abrazaldo, the SEC is currently studying the implementation of interest rate ceilings. Sen. Erwin Tulfo stressed that the license of the lenders who are abusive when the borrowers are unable to pay should be revoked.