Sweden’s payday lending market
No, you will not find any storefront billboards with offers of cash loans repayable with the next paycheck in Sweden or most other western European countries. But it is probably the best term to describe the fast growing European online market of high interest cash loans.
This is because European online cash loans shares almost all of the characteristics of US payday loans. It is a consumer credit market for economically vulnerable individuals from low-income households with low credit ranking.
In Europe online cash loans (snabblån) are also popular among young partygoers with little worries of tomorrow. Some lenders offer quick credits around the clock and even on weekdays. Within only a few minutes money is made available and the party can go on for a few more hours.
European short term cash loans are offered a very high APR, have a short repayment period (often 30 days) and are subject to hefty fees for late payments.
Online lenders thrives in borderless market
The European single market encompasses the EU’s 28 member states and is a borderless free trade zone.
The entry threshold for a company in any member state to roll out an online business all over the union is low. A website can easily be translated into multiple languages, customer support and other functions can be outsourced and a presence in any local market be established within a couple of weeks.
Bad credit consumers – a Swedish goldmine
European government’s fastidious information gathering and registration of its citizens personal data is manna from heaven for loan sharks.
This is especially the case in Sweden were up to date records on income, address, debts, unpaid bills etc. are publically available for anyone to read.
With 10 years statute of limitation for consumer loans and an Enforcement Authority ready to seize assets on behalf of the creditor at any opportunity the probability to eventually collect on even the worst debt is high.
The creditor bides his time. Interest and fees will accumulate over time and when the debt is finally settled the initially small loan has grown into a substantial amount. In the end it will result in a very profitable outcome.