GENERICO.ruEconomicsClose microfinance organizations forever: the share of Russians taking out loans has again reached a three-year high

Close microfinance organizations forever: the share of Russians taking out loans has again reached a three-year high

How to stop shooting money before payday at a usurious interest rate

In 2023, the share of clients of microfinance organizations (MFOs) who take out repeat loans exceeded 83%. This is the highest figure over the past three years. The increase in repeat MFO clients occurred despite Russia's GDP growth last year by 3.6% and an increase in real disposable income of the population by 5.4%. MK found out from experts why citizens continue to turn to microfinance organizations and how to stop their dependence on microloans.

How to stop shooting money before payday at usurious interest

Svetlana from Anapa is 43 years old, and for the past 5 years she has not been able to get out of a debt hole called a “microloan”. “I still don’t understand how I fell into this trap. She seems to be an adult and sensible woman, with two higher educations, the first being a mathematics teacher, and the second degree I received 10 years ago as a psychologist. But as a result – 4 microloans on the neck,” our heroine complains.

And it all started completely banal: Svetlana’s computer broke down. And she decided not to contact the bank – it would be long and tedious. I contacted a microfinance organization that I found on the Internet: “I decided to take an inexpensive laptop – for 30 thousand rubles. I liked that the managers on site explained everything clearly, and it turned out that it didn’t seem so scary. But, unfortunately, I was unable to repay the microloan on time. And I signed up for another one to pay off the interest on the previous one.” Then everything began to grow like a snowball. There is little money, the woman’s salary is small, there is no husband, two children, and the parents are pensioners and live very modestly. And she began to borrow from friends and acquaintances in order to close two microloans as quickly as possible. At the same time, I started tutoring – additional lessons in mathematics for 300 rubles per hour. But the situation hasn't changed much. And Svetlana again ran to the MFO for money. This time to buy a new phone for my son. “Having taken out a microloan in the amount of 15 thousand rubles, I delighted my child with a new gadget, but at the same time I incurred another debt. And I understood that microloans are not decreasing, but on the contrary, they are only increasing. I remember I didn’t pay for four months, I just gave up on everything. There was no time for that. But in vain! One “fine” day I received a call from the MFO. I promised to find the money and pay off part of the debt. I borrowed 15 thousand rubles from a friend and used the entire amount to cover part of it. So what is next? Believe it or not, I decided to take another microloan again. Already the fourth. And I really regretted it.”

As a result, Svetlana spent all the financial resources lent to the MFO for other needs. The debts grew by leaps and bounds, and our heroine had no intention of covering them. Until the local police officer called her and invited her to a conversation. As it turned out, the MFO sold the debt and filed a statement against Svetlana. “Already at the police station, I explained everything: that I have as many as 4 microloans, no money, nothing to pay with. After an hour of communication, they let me go, but they convincingly asked me to pay off all the debts as soon as possible. I should add that because of my debts, I was blocked from leaving Russia, but I have no intention of leaving anywhere.”

Several times, a resident of Anapa received threatening calls from an unknown man, and once collectors even came to her home at the address she indicated when applying for a microloan: “I don’t respond to pressure from third parties. Push – don’t push, but if there is no money, then after calls it will not appear. These microloans are a complete headache. Thank God, I was spared the story of publishing my photos on porn sites. There are such examples in life. After all, many collectors have no moral principles at all.”

Svetlana plans to gradually begin to repay the accumulated microloans. The woman resolutely rejects bankruptcy. According to her, because of the complexity of the procedure and the money it requires. In the meantime, our heroine is spinning as best she can. “You will laugh, but I go and collect aluminum cans. The price tag for them is very good. About 56 rubles per 1 kg. I am already known at all reception centers. And I'm not ashamed of it. Every person in life spins as best they can. For an additional fee, I solve mathematics problems for schoolchildren. I have enough for bread and butter with two children. Of course, I really want to pay off all my debts as soon as possible. I think that in about another year I will pay it all off. I don’t take out new microloans. Everything is taboo. I promised myself that I won’t get involved in such stories anymore.”

Svetlana advises all victims of numerous microloans not to engage in another extension: “It’s better to have one microloan, even if you’ve overdue it. You shouldn’t sign up for another one to pay off the first one – this is the path to eternal bondage. It is important not to flirt or get carried away with this financial scheme, otherwise you will learn a very expensive money lesson in your life.”

But for Kostroma resident Olga, things are much worse in the field of microloans. According to a 35-year-old woman, her life went awry 3 years ago when she decided to take out a small microloan to buy a refrigerator for her dacha. “Until that moment, I lived and did not grieve, worked as a deputy director in a clothing store, everything suited me. I'm divorced, no children. My parents died early, and my grandparents inherited a good-quality country house 20 km from Kostroma. And I decided to start equipping it. And all this resulted in 8 microloans. Now I’m a habitual defaulter.” At first, Olga had difficulty paying off her debts. But lately it hasn’t been working out very well—there’s only enough money for the bare necessities. “I almost paid off the microloan of 15 thousand rubles for a refrigerator, but I thought that I could also replace the sofa, armchairs and TV at the dacha. And in the same microfinance organization I issued 3 more microloans for a total amount of 25 thousand rubles. And after that, real hell began: almost my entire salary – 65 thousand rubles – was spent on repaying 4 microloans. And after work I started periodically driving my old car. It didn’t come out much – about 10 thousand rubles a month. And the debts grew. What to do? I had to contact the MFO again. Now I’m already looking for 2 microloans, so that I can be the last to somehow try to close the previous ones.” And then there was another setback – they decided to close Olga’s clothing store. And the woman instantly became unemployed. Arrears on microloans have begun. She did not borrow from acquaintances and friends. And the “almighty” MFO came to the rescue. “Probably, a kind of psychology worked, and I again took out microloans – the 7th and 8th in a row. I paid off some debts, but not all.” Olga found a job quickly, but lost in salary: only 55 thousand rubles in hand. Meanwhile, the debt only increased. “I sold my car, started using public transport, and turned to a law firm for help. I had to pay 7 thousand rubles for this service. “Lawyers offered me bankruptcy, but I refused. And the bailiffs began to deal with my debts. Now my debt is 350 thousand rubles. It seems not so much, but not little either. It’s funny, but every month I still try to slowly close my microloans – 5 thousand rubles each. I receive notifications from the bailiffs once a week.”

As Olga notes, she has two options for the development of events: either the bailiffs will, after some time, begin to forcibly write off all the money from her bank card to repay microloans, or she will have to hire a lawyer and file for personal bankruptcy: “This will cost a lot – about 150 thousand rubles. And the procedure is long: about a year. As a student, I completed a manicure course. And now on weekends I do nail beauty at home. At least a pretty penny. I try to cover the debt with everything I earn.”

According to our heroine, MFOs should be closed forever long ago. And don’t fool our citizens: “It’s not for nothing that centuries-old people’s experience teaches us not to swear off poverty or prison. I will pay off my debts and live within my means. It's better to save little by little than to be startled by every phone call. I only console myself with the fact that I have a roof over my head and a main job with a small part-time job. Microloans are evil. Don’t take my example,” the Kostroma resident urged.

The total volume of microloans from Russians based on the results of three quarters of last year (the most recent data) increased by 18.2% compared to the same period in 2022 and reached 348.1 billion rubles. And the total number of MFO clients over the same period approached 20 million. And now it has become clear that the number of repeated requests to these companies from citizens over the past year was the highest since 2020: their share reached 83.4%. Experts have identified five reasons for the popularity of microloans among compatriots. So, according to Associate Professor of the Department of Finance for Sustainable Development of the Russian Economic University. Plekhanov Ayaz Aliyeva, firstly, the number of MFOs on the market is decreasing, which affects the choice of citizens. Secondly, it is also necessary to take into account consumer psychology: it is easier for people to return to the same microfinance organization where they are already known.

The third reason is the high development of digital services among microfinance organizations. “We are talking, first of all, about the possibility of obtaining loans online, which makes them easier to obtain and service,” explained Alexey Volkov, Marketing Director of the National Bureau of Credit Histories.

The fourth reason for the popularity of MFOs among compatriots is the specific profile of the client, because a significant part of those taking microloans are citizens with not the highest personal credit rating, whom banks often refuse to receive loans.

The fifth reason for the popularity of MFOs among Russians is marketing campaigns and their own work to maintain the loyalty of their clients. Many organizations of this type deliberately offer reduced interest rates to regular customers. For the MFO business model, a repeat client is the best. “Microfinancers are caught between two fires in terms of risks,” explains Mark Goikhman, an analyst at the Capital Skills financial academy. – On the one hand, there is a vigilant regulator – the Central Bank of the Russian Federation – with its vigilant supervision and tightening of requirements for the activities of microfinance organizations. On the other hand are borrowers who bear not only profits, but also the potential dangers of non-repayment. And from both points of view, “repeat” is preferable. He is more understandable, studied, and predictable compared to a new client.” In addition, repeat clients require MFOs to spend less on arranging a loan for them, which saves companies money. That is why MFOs strive to work more with “returning” clients. It is easier for them to refuse a newcomer, but to give a little more to an old acquaintance.

This phenomenon has a very important social dimension. You need to understand that repeat borrowers most often return for expensive microloans not because of a good life. They feel a constant need to grab money before payday due to lack of income or chronic financial problems. Often, “repeaters” take out new loans to repay previous ones, for example, from another microfinance organization. These clients remain in many cases disadvantaged, bearing risks for lenders, which financial institutions compensate for with high interest rates. As Vladimir Kuznetsov, vice-president of the Association of Lawyers for Registration, Liquidation, Bankruptcy and Legal Representation, said, the formation of a “permanent debtor” behavior model occurs due to a lack of financial literacy and responsibility of the potential borrower. For debtors who already find themselves in a similar situation, effective advice would be to pay off debts using existing funds, rather than by taking out a new loan. In a critical situation, bankruptcy may be the only way out, but after getting rid of debts, it is important to remember that the new “debt hole” can become much deeper.

According to the founder of the Union of Banks of Moscow company, Daniil Kleshko, if a person is already a regular client of an MFO and wants to leave this status, he should, first of all, learn to plan his finances in such a way as not to apply for new loans. Budgeting and cutting unnecessary expenses may be necessary. It is also useful to contact a financial consultant or debt management specialists: they can help develop a plan for repaying existing debt and organize a financial plan that excludes a new application to an MFO. In addition, do not forget about other opportunities for obtaining financial support, such as loans from relatives and friends. In some cases, this may be a more profitable option than contacting an MFO. “I always advise you to keep records of all your income and expenses,” Anna Gondusova, Client Relations Director at Alfa Capital Management Company, supports the idea. — It can be in a notebook, it can be in special applications. This exercise helps you discipline your spending.” In a couple of months, as a rule, it is very easy to understand what you can save on without a significant drawdown in your standard of living, the financier noted.


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