The business with overpaid loans is nothing new.
There are two major variants: Either the money shortage of people in trouble for profit purposes is used or the cost of a loan are cleverly disguised. http://www.newviewpublications.com/payday-loan-online-ontario-can-i-get-a-loan-with-bad-credit/ for clarification
In Finland, a mesh of the second variant is currently rampant, which has called the government there on the scene. The lenders act so far legal and use the latest technological methods.
Lending proceeds as follows: An interested party sends a short message to the credit provider via his mobile phone. In the SMS, the desired amount is specified and an identification number, which is available via a registration on the Internet. Subsequently, an electronic credit check and the immediate payment of the loan are made. Borrowers can have the funds within three minutes. This extremely fast payout is possible through a booking without time delay. A normal bank transfer takes at least one working day.
Quick processing of loan
However, the quick processing of loan applications is the only positive thing about the procedure. The cost of the loans is enormous. As a rule, the loans are repaid after one month. The interest then amounts to about a quarter of the amount drawn, resulting in an annual interest rate of about 1600 percent interest.
The recorded amounts are usually not very large and exceed almost never 1000 usd. The rapid payment and the straightforward application pushes in the opinion of debt counseling, however, exactly those consumers in the arms of the modern loan sharks, which can actually afford a loan collateral must not be deposited. Every fifth consumer credit in Finland, whose repayment is problematic, is based on one of the SMS loans. For this reason, the government in Oslo is currently working on a legislative amendment designed to put the dubious lenders out of business.
In Germany, such awards are not legally permissible. The legislator classifies loans with excessive interest as immoral, resulting in a nullity of the loan agreement. If such a status is judicially determined, the loan is void; the borrower has to repay it to the lender. Interest only accrues on default. The interest rate to be applied then amounts to around nine percent.