“This is a medical problem,” says Marje Josing, head of the Estonian Institute of Economic Research EKI, adding that it seems that Estonians have no economic sense and cannot calculate the skyhigh interest amount.
It only two years since that the first companies started to offer SMS loans in Estonia this has grown into a business worth at least a billion kroons.
“The results of the first three months allow me to believe that we will issue at least twenty percent more loans this year,” said Aare Sosaar, CEO of market leader SMS Laen. He added that the business is growing so rapidly that it is very difficult to make any forecasts.
It is believed that the market share of SMS Laen is more than 50 percent in Estonia. There are about ten companies offering SMS loans in Estonia today.
Since about 10 percent of the people who have taken an SMS loan have problems in repaying the debt, this means that also debt collection agencies have plenty of business.
“The number of small borrowers in trouble is increasing,” confirms Jaanus Laidvee from debt collection agency Julianus Inkasso. In average, customers in trouble owe between 20,000 and 25,000 kroons.
Filed under: Economy in general