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Government seeks to rein in 920% interest rates

The cabinet wants to crack down on instant loans of less than 2000 euros.

Ruutukaappaus pikavippejä tarjoavan yrityksen internet-sivusta.
Ads for instant mobile loans often leave consumers unclear about actual interest rates. Image: YLE

The government is preparing new legislation that would force lenders to more carefully check borrowers' ability to pay back quickie loans.

The new regulations would also limit the sometimes-exorbitant interest rates charged on such loans. The maximum effective annual rate would be 51 percent. At present the average interest rate charged on such loans is a staggering 920 percent.

The Ministry of Justice says the moves would help prevent over-indebtedness.

In recent years, there has been a spike in young people getting over their heads in debt due to easy credit available via mobile phones or over the web.

The small-scale loan association, Suomen Pienlainayhdistys, argues that the new laws would force some lending companies out of business.

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