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Debt Trap Alert: How To Stay Safe from Online Loans in Indonesia

Online loans have become increasingly popular in Indonesia in recent years, and while they can be a convenient way to get quick access to funds, they also come with risks. One biggest risk is falling into a trap set by predatory lenders. These lenders often advertise fast and easy loans with high-interest rates and hidden fees, trapping unsuspecting borrowers in a cycle of debt.

To avoid getting trapped by online loans in Indonesia, there are a few key loans things you can do:

Do your research Before taking out an online loan, it is essential to do your research. Look for reviews and ratings from previous customers to see if the lender is reputable. You can also check with the Indonesian Financial Services Authority (OJK) to ensure that the lender is licensed and legal.

Read the terms and conditions Always read the terms and conditions carefully before signing up for a loan.

Avoid loans with high-interest rates Be wary of lenders offering loans with extremely high interest. Their loans may seem tempting because they offer quick access to cash but they can quickly spiral out of control and leave you in a cycle of debt.

Avoid loans with hidden fees Make sure you know exactly what fees are associated with your loan. Some lenders may charge hidden fees for early repayment or late payments, which can quickly add up and leave you with unmanageable debt.

Don’t borrow more than you need Only borrow what you need, not what you think you can get. It is easy to get caught up in the excitement of having access to fast cash, but borrowing more than you need can lead to unnecessary debt.

Have a repayment plan Before taking out a loan, make sure you have a repayment plan in place. Understand your financial situation and make sure you can afford the repayments.

Online loans can be a useful tool for getting quick access to funds, but they also come with risks. By taking all the steps above, you can avoid falling into a trap set by predatory lenders.

The legal basis for Online Loans is regulated in the Financial Services Authority Regulation No. 10/POJK.05/2022 regarding Information Technology-Based Collective Funding Services. If there is an allegation of criminal acts of fraud, extortion, defamation, or default, then the Criminal Code, Civil Code and Electronic Information and Transactions Law No. 19/2016) is imposed.

Note: Foreigners cannot be a borrower on online loans according to article 28 OJK regulation No. 10/POJK.05/2022, only allowed for: a. Indonesian citizens; b. Indonesian legal entity; and/or c. Indonesian business entity.


Written by: Aya Kandio | Legal Consultant: Wulan Purwanti, S.H


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