Bank South Pacific (BSP) Personal Loan Flawed Interest Rates.

By Essena Rose Hamura

Over successive years mainstream media outlets publicized BSP's massive annual profits after tax. These publications showed that BSP attributed high profit surge to its loan products. One would wonder why BSP makes massive profits from loan products than other products. My loan experience and analysis is anticipated to inform BSP loan customers loan flaws and fraud at the backdrop of customer ignorance and unawareness.

Why many people are attracted to BSP personal loans?
Possible reasons:
1. Loan approval efficiency (same day approval and processing.
2. 35% interest rate.

I had the opportunity to obtain loan from BSP to purchase my first ever vehicle (2Wheel Mazda Bravo). The purchase price offered by my friend was K10,000. I provided the relevant documents required and got approval and processing the same afternoon.

According to the loans officer, my total loan would be K16, 000. From my layman perspective, I understood that the extra K6, 000 would be my loan interest built onto my loan as interest charged by BSP. This would be 60% contrary to 35% interest rate. My fortnightly loan repayment at K395 for 2 years (48 fortnights).

Since I needed the vehicle, without delay, I signed the loan agreement form without analyzing the prospective monetary detrimental effects it poses.

As deductions progressed, I observed that my loan balance failed to reflect fortnightly loan deduction. On 29/8/2019 I noticed via SMS banking that my loan balance was K9,600. After K395 was deducted, the loan balance was K9,451 instead of K9,205. I noted K149 missing.

I queried the loans officer to justify missing K149. He explained that It was used to service monthly loan interest. He showed that every month I was paying K149 monthly interest apart from the K6,000 (60% interest rate).

Basing on the loans officer's information, I did the loan interest rate analysis and established the following interest rate flaws:
1. 36% interest rate. K149 totaling K3,576 after 2 years (24 months) repayment period.
2. 60% interest rate of K6,000.
3. Total loan interest rate - 96%. (60% + 36%). Total interest - K9,576 for K10,000 loan.
4. Total repayment after 2 years would be K10,000 + K9,576 (96% loan interest) totaling K19, 579.

My loan experience and analysis is anticipated to provide insight into how BSP bank flaws and fraud interest rates from personal loans:
1. Generated millions of money for its owners at the expense of ignorant and unaware customers.
2. Charges almost 100% (96%) interest rate for personal loans contrary to much publicized 30% loan interest rate.

Interested individuals or parties can make analysis on personal loan products or other BSP loan products to identify if there is/are flaws as analyzed. This experience and analysis is intended to inform:
1. People personal loan flaws so that they can make informed decisions to or not to obtain loan from BSP.
2. The government or its agents responsible for regulating bank laws conduct investigations into BSP to establish the authenticity of my experience and analysis to be factual or not. If factual, prosecute BSP management for the fraud on ordinary PNG citizens.

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