KVIKLÅN

Kviklån (literally "quick loans") are those with a very short maturity, typically a month or less. Typically they appeal to people with few resources, who need cash in a hurry. The problem with them is that the interest rate can be incredibly high, up to thousands of percent on an annual basis. Under E.U. law, this annual rate (ÅOP in Danish) has to be made clear to the customer. Often, however, the figure is tucked away in the small print, or the customer doesn't understand what ÅOP means. The headline rate seems reasonable enough, and that is all that matters.

The market for kviklån (literally "quick loans") has exploded in recent years. Between 2010, when they first started to appear in Denmark, and 2014 the number of loans rose 7-fold and the total amount lent 10-fold. That has given rise to concern within the authorities, since around half of all loans are not repaid on time, and a quarter repaid more than a month late. The worry is that unwary customers end up in a downward spiral of fees, extra interest and possible repossession of assets.

In response to this the Government is proposing that there should be a minimum period during which the customer considers whether to accept the loan or not (in contrast to the current situation, where borrowers are promised that the money is in their account "the day after" their acceptance). This has cross-party support, and is likely to become law. Whether it prevents people from continuing to take out such loans if of course another matter entirely.  

Walter Blotscher