A young man surnamed Yin who just graduated from a university in Hangzhou City, Zhejiang Province, borrowed 7,000 yuan ($1,047) in 2017 to repay his credit card debt.
Unbeknownst to him, he had fallen victim to local loan sharks. Within a year, his debt had ballooned to 3 million yuan ($448,550).
College students—often struggling to find a job post-graduation amid the country’s growing unemployment—are a common target. In recent years, there have been several cases of college students committing suicide after they’re unable to pay off such predatory “student” or “internet loans.” This February, a 21 year-old woman jumped off a tall building and died. His father, while sorting through her possessions, found out that she had borrowed several thousand yuan through internet lenders, which after three years of a repayment plan, had grown to a debt of 170,000 yuan ($25,418).
According to an April 13 report by Qianjiang Evening News, Yin, a native of Hangzhou, was 23 years old in 2017. He wished to pay off his credit card balance of roughly 3,000 yuan ($449). Yin discovered that a “friend” surnamed Chen on Wechat—a popular Chinese social media platform—described himself as a loan agent working for a loan company. Yin expressed his wish to borrow 4,000 yuan ($598) from the friend’s company.
Chen took him to an office building. After Yin filled out a form to provide personal and family information, Chen told him that the minimum amount to borrow was 10,000 yuan ($1,495). Yin agreed. Unexpectedly, Chen wrote on the promissory note that Yin borrowed 20,000 yuan ($2,990), using the excuse that this was “standard industry rules.” Yin decided to accept it, as he was anxious to borrow money.
Chen subsequently specified more requirements: for each 10,000 yuan ($1,495) to a borrower, there is a processing fee of 2,675 yuan ($400); the repayment schedule is to pay 875 yuan ($131) of principal, plus interest every week for 20 weeks; prepayment is not allowed.
Yin felt the conditions were too much and wanted to give up. But Chen threatened Yin, saying that he would take Yin to court because Yin just signed the note to borrow 20,000 yuan ($2,990).
Yin did not know what to do. Ultimately, he proceeded with the borrowing. On April 16, 2017, after paying the processing fee, Yin got 7325 yuan ($1,095) in cash from Chen.
In the seventh week, Yin no longer had the money to continue the repayment. The Qianjiang Evening News did not provide further details about why Yin was in financial distress.
Yin went to Chen, who claimed that there would be a 30 percent charge for defaulting on the loan, and recommended that he instead secure funding through another lending company called “Timely Rain.”
Yin borrowed 30,000 yuan ($4,486) from “Timely Rain” this time, with a monthly interest of 1,600 yuan ($239). His note was 80,000 yuan ($1,196)—the principal plus the accumulated interest. When he obtained the 30,000 yuan ($4,486) from the new company, he gave 15,000 yuan ($2,243) to Chen to pay off the previous debt.
Once again, in September 2017, Yin was about to default on his new loan. The Timely Rain lenders recommended he try to borrow from Crown Capital. Yin took their advice.
One day, he was forcibly taken to an office building by a group of men. They claimed to be Crown Capital “managers” and pressed him to repay the money he owed. After a four-hour ordeal, Yin was finally allowed to leave after he managed to pay 20,000 yuan ($2,990) in owed interest.
In May 2018, Yin was devastated. His elder brother tried to help as a guarantor for his debt, but constant phone calls from the lenders demanding repayment severely interfered with his daily life. The brother had to quit his job as a result.
Yin’s debt had now snowballed to 3 million yuan ($448,550) .
Yin’s family decided to report the case to the police at the end of May. Police found out that the lending companies Yin encountered were predatory lenders and that they were associated with a local mafia—though media reports were unclear whether the lenders were all linked to the same mafia group.
Police found that Crown Capital was not an officially registered business. In addition, Crown Capital and other companies like it often resorted to violent tactics and intimidating threats to demand repayment from borrowers, police said.
At the time, at least 47 borrowers had fallen prey to these loan sharks.
During the interrogation, an employee at one of the loan shark companies told police that he begins work every day at 11 a.m. The base salary is 3,000 yuan ($449). He earns a 400-yuan ($59.8) “commission” from each loan. He said he easily earns over 10,000 yuan ($1,495) each month.