10 Reasons Why People Fall Prey to Online Loans

The Indonesian Financial Services Authority (OJK) stated that it has shut down 5,468 illegal online loan (pinjol) and investment services between 2018 and 2022.

Despite this, online loan services appear to still be in demand among many Indonesians. This is reflected in a research report by NoLimit Indonesia titled "Developments in Online Loan Issues on Social Media" (2021).

NoLimit Indonesia conducted research by monitoring social media conversations containing keywords such as "pinjol," "online loan," "illegal loan," "illegal pinjol," and so on.

Monitoring was conducted from September 11 to November 15, 2021, resulting in data of 135,681 conversations containing related keywords.

From the analysis of this conversation data, NoLimit Indonesia found various reasons why people use online loan services.

"The dominant reason why people still use online loan services is to pay off existing debts," NoLimit Indonesia explained in its report.

Here are the top 10 reasons why people fall into online loan debt, according to NoLimit Indonesia's research:

1. Paying off other debts: 1,433 conversations
2. Lower-middle-class economic background: 542 conversations
3. Faster disbursement of funds: 499 conversations
4. Meeting lifestyle needs: 365 conversations
5. Urgent needs: 297 conversations
6. Consumptive behavior: 138 conversations
7. Economic pressure: 103 conversations
8. Buying a new gadget: 52 conversations
9. Paying school fees: 46 conversations
10. Low online loan literacy: 42 conversations

This research also found that the victims of illegal online loans were mostly teachers (42%), followed by those who had been laid off (21%), and housewives (18%).

There were also victims of illegal online loans who were employees (9%), traders (4%), students (3%), barbers (2%), and online motorcycle taxi drivers (1%).