The other day we stumbled upon a one-year-old debate article in Steve Dunes that we found interesting. The debate article was published a year ago, February 2, 2015, just two days before Best Bank saw the daylight for the first time. Although the article is a bit old, we still think it may be worth looking into it and the facts it contained. It is very interesting reading.
80% of enforcement authority ‘s debts are governmental
Andrews Stevenson, CEO of Allwise Financing, wrote in the debate article that it would be desirable if you put as much energy into combating over-indebtedness caused by the state as in combating quick loans. He also claimed that state-owned companies use methods that aggravate the economy of the already vulnerable when they collect their debts.
Not only that, at the turn of the year 2014/2015, but there were also one million cases at enforcement authority due to unpaid congestion fees and TV fees. This corresponds to 80% of all cases at enforcement authority. This is very interesting considering that it is always pointed out that sms loans lead to indebtedness even though it is a much smaller problem than the debts to the state.
5555% in penalty to the state
It is said that it is absurd that small sms can grow so large if they end up with the debt collection and the chancellor, but Andrews Stevenson shows that the state is not so much better, on the contrary.
If you fail to pay for a congestion charge of only $ 20, the Swedish Transport Agency will take $ 500 in delay fee, this also applies to debts as small as $ 9! $ 500 in penalty for a debt of $ 9 is 5555% in delay fee and the debt grows even lower if it ends up with enforcement authority. And then it sounds like an unpaid sms loan gives an interest rate of around 30% and a collection fee of $ 180 if it ends up with debt collection and then the loan can be of several thousand USD, not $ 9. 5555% in interest for a debt of $ 9, that ‘s absurd!
Over 2 million percent in effective interest rate
And if one were to convert these 5555% in fee to interest, this percentage corresponds to only one day’s interest because that is what you have to pay in case of a day’s delay. The effective interest rate is thus 365 times as large as this amount, since the effective interest rate is always based on one year. This means that the effective interest rate in the above example ends up at 2,027,575%! Hmmm, wondering what the criticism would have been about if private traders demanded a delay fee that corresponded to an effective interest rate of over two million percent. It had probably been called useless about something?
Warning for sms loans?
You should not say stone in glass houses, but that is exactly what the state does. They cab with their finger towards the fast-loan market but do nothing about their ridiculously high penalties that really aggravate the situation of those who already have it bad. Sure, we should definitely not reduce the risks of sms and fast loans, but frankly, this also applies to debt to the state.