HomeSMS Loans – Not The Biggest Cause Of Debt

SMS Loans – Not The Biggest Cause Of Debt

In 2006, fast loans were launched in Sweden. Since then, more than 40,000 people have not been able to repay the cost of their loans and unfortunately ended up with Cronogden. Last year, a total of approx. 1.2 million applications for payment orders to Cronogden. However, every tenth application came from the Traffic Insurance Association, which last year alone submitted a total of 108,000 applications.

Municipalities, county councils, CSNs and mobile operators are examples of organizations that send significantly more people into the debt trap than the SMS loan companies do. Despite this, the media and the authorities choose to highlight SMS loans as the biggest culprit for people who fall into the debt trap. Sanny Mill believes it is unfair and wrong to generalize when it comes to the SMS loan market. This is because the level of seriousness differs tremendously between the serious and the bad lenders.

 

Difference between serious and serious players

sms loans

Sanny Mill believes that it is necessary to distinguish between actors who do not know who is the lender and who is not under the supervision of the Swedish Financial Supervisory Authority. These usually offer extremely high fees for their sms loans, unlike serious lenders who want to be able to offer short and small loans with good terms to people who are really in need of this type of loan.

SMS loans are a unique loan and cannot be compared to larger loans such as mortgage loans and mortgages. Nevertheless, when the media points to the effective interest rate, which is admittedly high, they ignore the fact that a borrower does not take an SMS loan once a month for a full year.

According to the Swedish Consumer Agency, Finansinspektionen and Cronogden, there are about 30-40 players, but they are not sure of their figures. This is explained by the fact that they cannot control all players, as rogue lenders do not even inform about which company it is that stands as a lender.

Since the introduction of SMS loans in Sweden, the debate has been very intense and as early as 2007 the Swedish Consumer Agency requested a review of the current Consumer Credit Act and that SMS loans should be included in this. However, despite pressure from, among others, Sweden’s Consumers and the Swedish Consumer Agency, the legislation has not been tightened. According to Justice Minister Bea Wask, the government has been pushing for this because they want to wait for the implementation of the EU Common Consumer Credit Directive.

 

Sanny Mill welcomes the bill

money loan

Sanny Mill welcomes a bill and regulations regarding the loan form SMS loan. A change in the law would mean, among other things, that a borrower has a right of repayment of 14 days, that the effective interest rate must always be stated in marketing and that the lenders carry out a credit examination of the consumer before a SMS loan is granted.

Effective interest rate in marketing: For Sanny Mill, it is always about being as clear as possible to customers who are applying for micro loans. According to Sanny Mill, setting the effective interest rate is rather misleading and confusing than clear. The idea that it should scare people away from this type of loan is extremely unthinkable as people will always be in need of small and short loans.

Internal surveys show that the majority of Sanny Mill’s customers would rather see the total repayment cost of a loan than the effective interest rate, which for many is a diffuse concept with difficult meaning. That being said, Sanny Mill does not condemn this proposal; on the contrary, Sanny Mill would have no difficulty whatsoever in stating the effective interest rate in its marketing, although it would, in all likelihood, result in confusion for the borrower.

 

Credit Checking

Credit Checking

Conducting a credit check is a matter of course for Sanny Mill. Both internal and external credit tests are conducted. Basically, it is about wanting to lend money to people who can repay. Without borrowers with repayment ability, lenders cannot find profitability in their operations.

We think that an interest rate cap should be introduced on SMS loans. The current legislation against ocher is toothless. We have also put forward the requirement that there should always be a certain time between application and granting, a so-called “cooling off” period, so that the impulsive loans, for example on the hook, decrease.

People who take a stand against this type of loan have a hard time understanding that there are obviously those who may be in need of a short sms loan. In addition, it happens all too often that people with too little insight into the industry express themselves, often in an illogical way. Sanny Mill sees no pattern where customers apply for loans while out at the pub. The majority of applications are on weekdays between 08: 00-16: 00. A so-called “cooling off” period on SMS loans is thus already applied today and the impulsive loans mentioned do not recognize Sanny Mill.

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