We have all seen some news about problems caused by quick loans in this country, but if you happen to have a steady income it is likely that you have never actually taken one. Firstly, what is a quick loan?
Also known as a payday loan (or pikavippi in Finnish) it is a smaller sum of money –usually between 50 and 3,000 euros – put on your account almost instantly by one of the over 80 quick credit companies in Finland. So, how does a quick loan differ from a regular loan?
On the first glance it sounds like a good option to take, especially if you are unemployed or have a payment default; in such a case it is likely to be the only loan you can get. If you do happen to be eligible for a bank loan, keep in mind that banks aren’t fond of giving loans smaller than 3,000 euros and to get that you have to visit the bank, have your credit details checked and show your ability pay it back. All this while a quick loan is only a text message away.
Another major difference comes in the interest rate; quick loans are given with a yearly interest of 300-1,500 per cent. There have been some cases where the yearly interest has been as high as 10,000 per cent, whilst only the two-week interest of 300 per cent was mentioned to the borrowers. Banks keep their yearly interest at the lower tens.
Quick loans have been a frequent topic in tabloids due to the growing amount of people that find it hard to keep up with the payments of their debts; these are usually young adults with little experience in handling their own finance. People would often take quick loans during late hours while drunk to pay for their night out. Night lending (from 23:00-07:00) has since been banned.
Since the arrival of quick lending in Finland in 2005, legislation has tried to keep up with the problems they have caused. This has been done by installing mandatory registration for credit companies, who must declare clearly the true yearly interest of the loan, in addition to checking the loan taker’s identity and withholding lending during the night.
Some credit companies have been under police investigation due to claims of usury. According to Helsingin Sanomat the owners or heads of at least six quick lending companies were linked to debt collecting agencies, through which they could make a higher return. Some companies have also been taking additional collection fees, which are against the law.
At the moment the parliament is processing two initiatives concerning quick loans; one proposes to tighten the regulation surrounding these loans, while the other seeks to ban them entirely. One feasible solution can be found on the other side of the pond; in Sweden quick loans are not available for people under 30 years of age.