29 July 2011 – Lending or borrowing of money at usurious rates, or 5-6, is a criminal offense prohibited in Saudi Arabia, warns the Philippine Embassy in Riyadh to OFWs based in the Middle East kingdom.
The advisory was issued due to the numerous requests for assistance received by the Embassy and the Philippine Consulate General in Jeddah concerning loans with high interest or being surety for other people’s loans that OFWs, their family members, or friends encounter.
To avoid being accused of usury, lenders ask borrowers to sign a promissory note for installment payments, with the total greater than the amount of cash borrowed. The payment scheme may be in the form of appliances, furniture or other valuable items instead of cash.
Most of the time, the guarantor is liable to pay the loan since he agreed to be bound by the agreement of becoming a surety for the borrower’s obligation.
In case the borrower defaults for any installment and the lender complains to the police, the borrower and/or guarantor are held accountable, detained and face endless imprisonment for a private rights case until the amount is settled fully.
The Embassy informs Filipinos that it is not lawful in the Middle East country to guarantee someone else’s financial obligation, if he could not settle the amount demanded for the satisfaction of the loan. This responsibility belongs to the borrower and/or guarantor.