Must I pay this much?

I’m writing to make enquires about the running of an unregistered motshelo scheme. I am one of the members.

We’re charged 10% interest when borrowing money.

I borrowed P4,300 back in July 2021 and then my employer closed his company during Covid-19 lockdown. I didn’t manage to pay back anything until when I got another job in May 2022. On the 22nd July, 2022 I said I was ready to settle my debt. They said the money had accumulated, and that in January this year it was P8,000. I paid P9,040 because I wanted to increase my contribution so that by December I should get a better amount plus my interest.

To my surprise, they’re saying I still owe a balance of P7,000+. According to my calculations, I have paid more than I was supposed to, I have sought for advice and I need a second opinion from you, sir.

I deeply regret the choices I made; I just thought we were ladies from the same village. Now I need answers as to why exactly are they demanding some more money when I’ve already paid. NBFIRA told me that’s an illegal scheme and my interest shouldn’t exceed the money borrowed. Could you please advise?

I’m not going to disagree with NBFIRA because they’re right. Clearly this is an illegal motshelo scheme. I’m betting they’re not registered with NBFIRA and they’re also breaking the “in duplum” rule, which says that when a debt is settled, the amount of interest cannot exceed the capital amount that you still owe. You borrowed just P4,300, you’ve paid back P9,040 and they still want another P7,000? That’s a total of P16,040, nearly four times the amount you borrowed. That’s crazy. At least some of the money you’ve paid should have reduced the loan amount and not just paid the outrageous interest this scheme is charging.

I suggest you speak to whoever is administering this scheme and pass on the advice from NBFIRA and insist that they do the maths again and this time come up with a better result. Either that or you submit a formal complaint to NBFIRA.