To cash out, he has accumulated a "snowball" debt.

This article is transferred from: Jin Wan Bao

To cash out, he incurred “snowball” debt

Reminder: “No credit check” and “fast loan” claims should not be trusted

Recently, the Tang Guantun Court in Jinghai District mediated a commercial contract dispute arising from the “buy now, pay later” purchase of a mobile phone.

Citizen Xiao Wang, due to poor credit conditions and an urgent need for funds, was misled by advertisements from online intermediaries to go to a certain installment mall to apply for a loan. The intermediary guided him to apply for an installment limit in his own name and purchase a new mobile phone for 10,000 yuan.

After receiving the phone, the intermediary then bought back the phone at a price far below market value and paid him 5,000 yuan, claiming there was no need to repay the platform. Xiao Wang thought he had successfully obtained a “loan,” but in reality, the installment contract was signed by Xiao Wang himself, and he was also the debtor. Subsequently, the mall began to collect installment payments and late fees from Xiao Wang as per the contract.

Unable to repay, Xiao Wang resorted to a similar method to cash out again to make payments, leading to a “snowball” effect of accumulating debt, ultimately resulting in the mall suing him in court.

After accepting the case, the presiding judge communicated with both parties, pointing out that the plaintiff’s claim for a portion of the amount was excessively high and difficult to fully support, while also explaining that the defendant indeed faced financial difficulties, suggesting a resolution through installments. The judge clarified to the defendant that he had indeed signed a contract and received the goods, and should bear corresponding responsibilities.

After multiple rounds of mediation, the plaintiff agreed to waive part of the payment and forgo late fees, while the defendant would repay the remaining amount in installments, and the dispute was ultimately resolved.

□ The judge reminds:

Poor credit should not lead to financing through cash-out methods, as such behavior may lead to an expansion of debt risks. If there is a genuine need for a loan, it should be applied for through legitimate channels, and one should not easily trust advertisements like “no credit check” and “fast loan,” nor should they place orders on unfamiliar platforms as requested by intermediaries, to avoid economic losses.

Reporter Chang Jian, Correspondent Liu Yiyao