Helpful Yet Problematic Financial Solution

“There are still 2 weeks until payday, but i’m running out of money what should i do?” one of the easiest solution to answer that question is by asking someone to lend you his money, or by taking a loan to financial institutions such as bank. Yet today due to advancement of technology there is another solution than taking a loan from a bank, it is called “P2P Lending”.

What is P2P Lending?

Peer-to-peer lending, also abbreviated as P2P Lending is the practice of lending money to individuals or businesses through online services that match lenders with borrowers. Since peer-to-peer lending companies offering these services generallu operate online they can run with lower overhead and provide the service more cheaply than traditional financial institution. Really futuristic, right?

Modern Solution Brings Modern Problem

Nevertheless this futuristic solution also provide us with a futuristic problem as well especially here in Indonesia. There are few cases of illegal p2p lending provided by also illegal fintech company which strangled the debtor from Indonesia. Two cases the we would like to present are Vloan case and RupiahPlus. What makes them terrible in the business is that the debt collector of both companies, without permission of the debtor, accessed the contact list of debtor which are not registered as emergency contact for collecting the money, then they ask those who are in the contact list to remind the debtor to pay for his loan, on the top if that these debt collectors even threatened the debtor to pay for the loan. In Vloan case the debt collector even threatened to spread debtor’s pornographic contents if the debtor were unable to pay for his loan. Other than data breach, interest rate in P2P Lending also brought problems for debtors. Asosiasi Fintech Pendanaan Bersama Indonesia (AFPI) limits the interest rate for P2P Lending maximum 0.8% per day. So let’s say that you borrow 1 million Rupiah with 0.8% interest and 30 days due date of payment, which means you have to pay 24% interest, so in the end you have to pay Rp 1.240.000, but before this policy was established the interest was at least 1% per day which means if you lend 1 million Rupiah in 30 days you have to pay at least Rp 1.300.000 if the interest rate were 1% and it can be higher depending on the fintech company considerations. If we compare with the usage of credit card which the interest rate is regulated by Central Bank approximately 2.25% per month or 27% per year. If you borrow 1 million rupiah then in a month you only have to pay Rp 22.500 interest. This high interest rate brings problem to the borrower one of the worst cases was taxi driver commited suicide due to inability to pay the principal and interest of the loan he took. These problem mostly came from illegal fintech company. Per april 2019 Otoritas Jasa Keuangan banned 947 illegal fintech companies which offer this P2P Lending. Also Per Aprli 2019 there are 106 legal fintech platform registered in OJK’s database. You can check the list here

How to avoid these illegal fintech company?

Based on the cases happened before, illegal fintech company which offers P2P Lending has characteristics as follows:

  • Company’s Identity is Disguised

Illegal fintech company usually does not include company’s complete address in the application

  • The lending process is easy or rather too easy

The legal ones usually have a strict requirement when giving loan, like for example doing a thorough interview with the potential borrower

  • Access your private information without permission

P2P Lending platform is not permitted to access customer’s contact list, gallery and other customer private information. They only permitted to access camera, microphone and location as stated in article 47 POJK 77

  • Tries to collect loan payment after working hour

Legal P2P Lending platform only collect loan payment on working hour as regulated by OJK.

So if you are in need of money and want try this futuristic solution, you better make sure that it is legal and safe for you and other people that are important to you.

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