It is often talked about how high-cost loans, ie sms loans or fast loans, are a big problem for many who end up in debt, in any case they are often talked about in the media. The fact that then debt to the state is a much larger dam is not something that is aged very much. Then there is a lot of talk about the large debt ratio and excess debt we Swedes have.
When it comes to over-indebtedness (debts that people have trouble paying back), quick loans are also often taken up as one of the big bulls, but is that really true? Probably not if you believe the fresh statistics Good Finance presented in its report Consumer protection in the financial market .
A sixth percent of Swedes’ debts consist of sms loans
According to the Swedish Financial Supervisory Authority’s report
Furthermore, Good Finance informs that the average fast loan during the last quarter of 2016 was USD 8,200 and then it should be clear that people borrowed extra money for Christmas and New Year, and that most actually only take a single sms loan. So it is not so common for people to have hundreds of thousands in debt due to sms loans that it can sometimes work when you read the newspapers or watch the TV program Debt trap.
That said, there are problems with sms loans just like with many “regular” private loans, but they have at least hardly anything to do with the Swedes high debt ratio. The big culprit is mortgages and other loans that require a collateral in terms of the debt ratio itself, and the mortgage loan is the biggest debtor in terms of debt, which is difficult to get rid of if you end up in a tough financial period, since these loans are usually much larger. than sms loans. Good Finance points to the loan intermediaries as one of the main causes of over-indebtedness when it comes to private loans, since the intermediaries receive commission from the lenders if they succeed in lending.
However, Good Finance also raises sms loans as a problem, but it does not appear to be as great many people think given these rather modest share of the total debt. In fact, it was the case that more debt existed at Kronofogden before the fast loans appeared in the financial market .
What is the debt ratio actually?
Certainly, the debt ratio is frighteningly high in Sweden, if there is no doubt. Today it has passed 180% while it was, for example, around 100 in the late 90’s. The debt ratio is people’s debt in relation to their disposable annual income. For example, if you have a disposable income of USD 240,000 / year and have a debt of USD 240,000, your debt ratio is 100%. This means that if you have a debt ratio of 180, you have a debt that is 80% greater than your annual income.
This, having a debt ratio of 180%, is of course not very good for people with small margins as the interest rate goes up and there are also many who have a significantly higher debt ratio than this, people who are really over-indebted. But as I said, when it comes to the debt ratio and the over-indebtedness in general, it has very little to do with sms loans and other high-cost credits.