Instant loan, also known as instant loan, a small loan or instant credit, is a short term consumer credit that is completely unsecured. In Finland, the VIP typically ranges from $ 50 to $ 1,000, with an average payout period of $ 300 over 3 months. A quick tip can usually be obtained very easily by text message or on the lender’s website.
The history of instant loan
An example of instant tips is the payday loan from the United States or payday loan. They are small loans granted to employees against a payslip. Their payback date is payday. Also in Finland in the 20th century, a bill of exchange, which was also known as a consumer bill and a bill of exchange, was used as a precursor to the instant lure.
This was a short-term loan of about three months, which, however, was often expensive for the borrower due to its high-interest rate and other payments. Consumers used bills of exchange to finance their purchases. Bills of exchange have not been used since the early 2000s.
Quick loan in Finland
In Finland, by far the largest user group of instant loans is 1-40 years old.
Finland has been engaged in quick lifting activities since 2005 and the sector experienced a very strong rise. In 2012, an estimate was released that there are about 80 companies that provide instant tips in the country. In 2013, a change was made to the law, which significantly tightened the timing of short-term loans and set an interest rate cap on small loans below USD 2,000. As a result of the reform, the number of instant loans fell dramatically and many companies in the industry completely closed down.
With more than 80 instant loan providers still on the market, there were major differences in the total cost and payout options for instant nippers, depending on the company that provided the instant loan. The so-called APR could range from 100% to 1500%. In comparison, the equivalent interest rate on traditional consumer loans granted by banks and other financial institutions fluctuates up to tens of percent.
The sensibility of the APR and the pricing of the quick couples were divided, while other experts strongly argued that the APR does not realistically reflect the level of consumption of short-term loans. Fast-start companies operating in Finland were required to declare the actual annual interest rate on their loans, but according to a newspaper report, up to 50% of companies underestimated their actual annual interest rate. For example, the annual interest rate for a 2-week loan could be reported at 300%, while the actual annual interest rate could be as high as 10,000%.
As the Finnish Ministry of Justice began demanding extensions for the quick loan industry, quick loan companies began developing various ways to attract new clients.
Some market the first loan as being free and interest-free
While other companies are developing loan types that are different from ordinary instant loans. The companies offered, among other things, instant pizza and loans allowing installments to be paid.
Even though instant loan has received a lot of attention, they have been quite rare when compared to other types of credit. According to a 2012 survey, only 1.3% of respondents had taken a quick nip in the past year and 0.3% had it at the time of their response, while over one-third had a loan and a third of consumer credit. It is noteworthy that consumer credit was most often taken from a bank.
The reform of the law brought significant changes to the quick-release industry. In 2013, more than one million new instant tips were issued to households for a total of more than USD 320 million. This represents a decrease of almost 20% compared to the previous year.
The borrowers paid a total of slightly more than USD 60 million in miscellaneous charges, representing a decrease of more than 30% on the previous year. The number of express brokerage firms had fallen to less than 70. The Small Loan Association of Finland, which has been operating since 2007, ceased operations in 2013.
The downward trend only continued, with at the end of 2014 there were fewer than 50 express brokerage firms on the Finnish market. At that time, the repayment period had also taken more than 80 days.