Delinquent payments reach near-record levels
Instant loans by SMS only part of problem
There has been a sharp increase in the number of Finns experiencing trouble paying their debts, and the number is approaching the record level set in the late 1990s.
In the first quarter of this year 137,900 people in Finland were cited for failing to pay off bills or debts, which is a quarter more than a year ago. According to fresh figures by the risk management company Suomen Asiakastieto, nearly 332,000 Finns have lost their credit data. The figure is more than 4,000 higher than it was at the beginning of the year.
The problem is most serious with young adults aged 25 to 29.
According to Heikki Koivula, head of business operations at Suomen Asiakastieto, the number of people with payment problems could exceed 340,000 by early May.
He says that one of the problems is the increased reliance on debt as well as careless consumption, particularly with online retailers.
“Living on debt has become more common in Finland throughout the decade, as more credit products are available to all consumers. When the income level weakens, people start having difficulties in handling their debts”, Koivula says.
In a typical case, a consumer will have several debts which fall due at the same time at a time when there is not enough money available to pay them.
Every debtor who has ended up in the credit registry in the early part of the year got an average of five new citations for delinquent payments in a three-month period.
Instant loans are only one of the factors behind the trend. Only one per cent of problems with payments are attributable exclusively to the controversial loans, which can be ordered by SMS message, but they are involved in some way in one out of five cases.
Nearly 80 per cent of debts subjected to debt collection procedures involve credit of other types.
Telecommunications debt increased by 45 per cent, and late payments for online purchases rose by 111 per cent from 2011.
The number of people with debt repayment problems is approaching the situation that peaked in the wake of the recession of the 1990s.
The record year was 1997, when 368,000 Finns had a notation of delinquent payment.
Previously in HS International Edition:
Initiative in Parliament to ban instant loans by SMS (4.11.2011)