Understand the risks of not paying debts or defaulting on illegal online loans.

Illegal online lenders are platforms that provide online loans but are not officially registered as businesses with the Financial Services Authority (OJK). According to several sources, defaulting on illegal online loans does not get reported to BI Checking or SLIK. However, this does not mean you are free to borrow from illegal online lenders without consequences. 

Here are some risks of defaulting on illegal online loan applications:

Risks of defaulting on illegal online loans

1. Soaring interest rates

According to Financial Services Authority Circular Letter Number 19/SEOJK.06/2023 of 2023, as quoted from Hukum Online, loan interest and late payment penalties for  Legal Online Loans in Indonesia can reach 0.3% and 0.1% per day, respectively. Because they are not registered with the OJK, the interest rates and late payment penalties for Illegal Online Loans can be significantly higher than these figures. As a result, your loan amount can swell much faster than it should. 

As an illustration, if you take out a loan from a legal P2P Lending platform for Rp1,000,000 and incur an interest rate of 0.3% per day, you would have to pay interest of Rp90,000-Rp100,000 in one month. Illegal online loan interest can reach 4% per day, meaning with the same principal loan amount (Rp1,000,000), you would have to pay interest up to Rp1,200,000 (greater than the principal loan amount). 

2. Social risks

Another equally terrifying risk of not paying illegal online loans is social risk. This is because the illegal lenders can easily access your contacts and gallery on your phone. As a result, they can easily embarrass you by contacting your friends or partner and asking them to tell you to pay your debt. 

The social risks of defaulting on both legal and illegal online loans are not limited to being terrorized by debt collectors.Many marriages have been on the brink due to accumulating online loans. This is not surprising, considering that your partner is also expected to help pay off the loan.

3. Personal data security risks

As discussed above, when you register for an illegal online loan application, the illegal lenders can easily access your contacts and gallery on your phone. Besides being used for intimidation, this data can also be indiscriminately sold on the dark web. In today's internet-driven era, personal data found on the dark web can be used indiscriminately. 

For example, with just your ID card number, unscrupulous individuals on the black market can apply for new online loans in your name or even find out your home address. Terrifying, isn't it?

4. Psychological risks

The fourth risk of defaulting on online loans is psychological risk, especially for individuals with vulnerable mental states. As the proverb goes, “when it rains, it pours” those who default on online loans will not only have a large amount of debt, but also potentially be shunned by their friends, or even divorced by their spouse. 

5. No legal protection

Legal protection for consumers caught in illegal online loans is very limited. In such cases, you can only report these platforms to the police or OJK (Financial Services Authority) for closure, and not take them to court. Therefore, choose online loans from legal platforms registered with OJK, so that your rights as a consumer can be legally protected. 

Tips for escaping illegal online loans

Already caught in illegal online loan debt? Don't worry! Here are tips to get out of those unregistered online loans:

1. Avoid robbing Peter to pay Paul

Many people fall deeper into online loan debt by choosing to 'rob Peter to pay Paul,' or paying off old debts with new ones. Instead of helping, this technique will only make your debt multiply, as you'll now owe money to several platforms instead of just one. Therefore, avoid this technique when trying to pay off online loan debt.

2. Pay off immediately

Paying off online loan debt is difficult, but not impossible. Here are some ways you can accelerate the repayment of online loan debt:

• Requesting leniency from the relevant online lender. For example, only paying the principal and interest, without having to pay late fees. 
• Selling high-value assets, such as a car, gold, or motorcycle, with some of the money used to pay off online loan debt. 
• Save money for a while. Try to set aside most of your income to pay off online loan debt. 

3. Report to the authorities

An important step you must take when caught in illegal online loans is to report to the Financial Services Authority (OJK), the police, and/or Kominfo. For OJK, you can report via email at [email protected] or visit the nearest OJK office. As for Kominfo, you can report to the official Kominfo complaint WhatsApp at 08119224545. This way, they can promptly ask Google or Apple to remove these illegal online loan applications from their platforms.

4. Talk openly with your partner and friends

If you are already trapped in online loans, immediately inform your partner, parents, and friends about it. The purpose is so they are aware if they are ever harassed by the online loan providers. Your partner and parents also need to know because, inevitably, some of their assets might have to be sacrificed to pay off your online loan debt.

Actually, getting a legal online loan is very easy. You just need to download the Honest App credit card application, then submit an application for Honest credit card. Approval rate for this card is 90%, so your application will likely be approved. However, to get a large limit on this card, you need commitment and good faith to diligently use it as a payment method and pay your bills on time. 

Frequently Asked Questions (FAQ):

1. What is the difference between legal and illegal online loans?

Legal online loans are officially registered with OJK, have strict official regulations, and their credit history is recorded in SLIK OJK. Illegal online loans, on the other hand, are not registered with OJK, so their credit history is not recorded in SLIK OJK.

2. Do all legal online loans have debt collector (DC) agents?

Not all legal online loans have debt collector, except for large-scale legal online lenders. They will visit your home if a borrower defaults on loan payments for 2-3 months.

3. Are legal online lenders allowed to share a customer's personal data if they are late in making payments?

Legally, registered legal online lenders (OJK-registered) are not permitted to disclose customer data or contact emergency contacts outside of the stipulated terms, even if loan payments are overdue. This is considered a serious violation.

4. What should you do when facing debt collectors who come to your home?

If there are field debt collectors who come to your home, deal with them calmly. Ask for their identification and an official collection letter. If they act aggressively, you have the right to report them to the authorities.

5. Am I allowed to not pay debts to illegal online lenders?

Even though illegal online lenders are not registered with the OJK, you should still pay off all those debts to avoid risks such as debt accumulation, social and psychological risks, and personal data security issues.