Predatory lending still exists in 2025
Currently, usury mainly thrives in the so-called private sector — meaning people without traditional social security, and those with poor literacy skills, such as the vast rural and urban populations, older non-state-owned enterprises, public institutions, government employees, and even many college students, since the student population includes a considerable number of those engaging in裸 loans. According to the article, interest rates can reach as high as 30%, typically calculated on a weekly or monthly basis rather than annually. Some lenders also practice "砍头息" (deducting interest upfront). For example, if you borrow 100,000 RMB at a 30% interest rate, the lender might only give you 70,000 RMB but still consider it as a 100,000 RMB loan. They deduct the 30% interest upfront, and only write the IOU for 100,000 RMB without mentioning the interest. Even more outrageous is when lenders demand daily repayment starting the day after the loan is made.
Why does this market still exist?
The main reason is that formal loans are not accessible to these people. For example, even if you have been stably employed at a non-state-owned enterprise or public institution for several years and have paid social security for years, you might still get an immediate rejection when applying for a loan through a bank app. This is even more so for the aforementioned group. Consequently, private lending has led to malicious borrowing practices (lenders use裸 loans, harassment, and threats against family members, relatives, friends, employers, neighbors, etc., to force repayment). Especially for couples living apart who are unaware of the truth, once one spouse secretly gets involved in usury (lack of trust does exist), and fails to address it promptly, it will evolve into a family debt黑洞.