Payday Loans in Finland and the USA : Contrasting Legal Responses to Consumer Indebtedness
Taebnia, Samin (2020)
2020
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https://urn.fi/URN:NBN:fi:amk-2020052614195
https://urn.fi/URN:NBN:fi:amk-2020052614195
Tiivistelmä
The purpose of the thesis is to indicate issues regarding payday loans and how the new law reform will affect the over-indebtedness of youth in Finland. I have used secondary research material for this thesis. The topic has been relevant in the current economic environment and therefore the best sources are news outlets such as The New York Times, CNBC and Kauppalehti. Data for this thesis has also been gathered from articles, literature, Finnish legislation and payday creditors website.
The law reform has prohibited high cost consumer credit loans in Finnish markets. The creditors are facing decreased return for their loans. As a result, the creditors can no longer grant loans to insolvent consumers. The consumer credit information will become more essential in the decision-making process of the creditor. Therefore, the debt cycle of the over indebted consumers will decline as they are not able to receive new loan to repay their prior debts.
The law has been reformed in order to protect consumers from the predatory payday lenders. Based on the findings many payday lenders have quit their operations leading to a decreased supply of small short-term loans. The remaining payday lenders offer higher credit limit to consumers with longer payback period. The regulation could also have the opposite effect as the consumers are able to withdraw higher amount of loan with longer payback period. Prohibiting high cost loans will not solve the primary issue of the consumers.
The law reform has prohibited high cost consumer credit loans in Finnish markets. The creditors are facing decreased return for their loans. As a result, the creditors can no longer grant loans to insolvent consumers. The consumer credit information will become more essential in the decision-making process of the creditor. Therefore, the debt cycle of the over indebted consumers will decline as they are not able to receive new loan to repay their prior debts.
The law has been reformed in order to protect consumers from the predatory payday lenders. Based on the findings many payday lenders have quit their operations leading to a decreased supply of small short-term loans. The remaining payday lenders offer higher credit limit to consumers with longer payback period. The regulation could also have the opposite effect as the consumers are able to withdraw higher amount of loan with longer payback period. Prohibiting high cost loans will not solve the primary issue of the consumers.