The government has appointed an investigation whose purpose is to reduce debt in Sweden and then one should also look at how the rules for sms / fast loans can be tightened. It is true that sms loans, in addition to unpaid cell phone bills, are one of the biggest reasons people are indebted, so we at Malcolm think this is an excellent initiative. We, like everyone else, obviously want people to be able to pay back their loans.
Interest rate ceiling for sms loans
It has long been talked about that the Riksdag should legislate on an interest rate ceiling with regard to sms loans and this is something that the inquiry is also looking at now. Today, there are fast loans that have well over 1000% in effective interest rates, while other lenders offer loans that have an effective interest rate of “only” 100 – 200%. Malcolm believes that an interest rate cap is welcome because there is no reason for some lenders to take the type of 1000 – 2000% at an effective interest rate when it is proven to take a tenth of it and still make a good enough profit.
However, it is important that the loan ceiling is not set too low because otherwise the profitability will not be good enough to be able to run such a business. Vivus, for example, takes SEK 100 for a loan of SEK 1000 which is put up in a month and we think this is reasonable even though their effective interest rate is three-digit.
The inquiry should also look at whether a rule can be introduced which means that the cost of borrowing must never exceed the amount you have borrowed. For example, if you borrow SEK 10000, the interest and the fees together may never exceed SEK 10000. This is also a reasonable thought, that paying more for the loan than what you have borrowed is absurd.
Requirements for written agreements?
The investigative team is also looking into whether it could impose requirements on written agreements regarding quick loans. If “written agreement” means that the borrower must sign a paper agreement that must be submitted to the credit company before the loan can be paid out, Malcolm is not included in the notes, partly because the introduction of paper agreements would be like withdrawing time and partly because it would mean the end for fast loan repayments. Okay, probably it would be okay to scan a signed paper contract and then send it by email, but it’s a lot more complicated. This is not liked, but we can not imagine that this backward thinking will come true. It would be horrible.
- Loan companies that are careless or too generous in their credit assessment should be prohibited. A good suggestion.
- The marketing of sms loans is expected to be further tightened, but the investigation team has not yet explained how it should go.
Not the first time the rules are tightened
The rules for so-called fast loans or sms loans have been tightened several times in order for companies in the fast-loan industry to improve their routines and to eliminate rogue actors. As recently as January, the latest rules were introduced which meant that sms lenders had to apply for a permit for their operations before they could start. In the past, it was just to register operations without any review, but then it is no longer. Now the planned business is checked and if it does not seem serious enough, the company gets no permit.