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Consumer beware: the instant loan by phone

September 3, 2010
 
High technology wired into phone services enables us to do many great things in Finland – access weather forecasts by phone, check-in to flights with a text message, buy a public transit ticket; receive reminders for appointments and so on. But the one frightening thing that has sprouted up in recent years is the ability to get fast cash to your bank account just by applying for an instant loan with your phone.
 
In the past there was little regulation behind the concept. You’re out at the casino gambling with friends and run out of money. The quick fix solution – get EUR 200 more with a text message to an instant loan company, head over to the bank machine and, voila, the party continues. Unbeknownst to many a receiver, the interest rates are often out of this world. A quote from Helsingin Sanomat International spells it out best: "In a period of twelve months an instant loan worth EUR 50 can accrue interest of more than 3,000 per cent." If you’re unable to pay it back immediately, you kinda screwed!
 
Consensus on the governance over the firms who offer these "services" has been a difficult obstacle in Finnish Parliament and members finally imposed a regulation that instant loans cannot be granted between 23.00 and 7.00 in an attempt to curb "bad judgements" made by people out on the town who run out of money. Instant loan firms have been ordered to positively identify lenders prior to approval and they must clearly inform lenders of the interest rates attached to their loans.
 
The advertising of instant loan firms is prolific, it’s everywhere and I bet for those in need of some quick cash, the temptation is big. Personally, it makes my blood boil that companies are allowed to encourage people to spend beyond their means.
 
In a country where personal debt is beginning to get unmanageable for some, it is amazing that instant loan companies are allowed to exist. They have been considered extremely controversial, with no end in sight.
 
Money makes the world go round… For some it allows them soldier on, while shouldering a heavy debt.
 
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