Jakarta (ANTARA) - Deputy Speaker of the People's Consultative Assembly (MPR) Sjarifuddin Hasan urged the community to avoid online loans that disadvantage consumers.

"Indeed, while receiving loans from online lenders, it feels like it can resolve financial problems. However, when it is time to pay them back, big problems will emerge," Hasan noted in a written statement from the MPR here on Tuesday.

Hasan made the statement at an event titled "Chat with Legislators" in Cianjur, West Java, on Sunday (January 28).

The MPR deputy speaker suggested people to avoid online loans, as the interests are higher as compared to the interests of loans from conventional banks.

To this end, he urged people to pay attention to the loan interests offered by online lenders.

"If there are online lenders who said that the loan interest rate is lower than the bank interest, then it must be fraud," he cautioned.

Hasan noted that some fintech companies, including some online lenders, had obtained license from the Financial Services Authority (OJK). However, sometimes, it is hard for people to differentiate between those already having a license and those not holding one.

The MPR deputy speaker highlighted that the reason behind the public's interest in online loans is because the procedure is easy and fast. Meanwhile, several conditions must be met in order to obtain loans from official banks.

"Online lenders take advantage of someone's financial problems. People are then interested to borrow money from online lenders," he explained.

According to Hasan, disadvantages of online loans are not solely related to money, as the borrowers are required to pay back a much higher amount to the lenders on account of the high interest rates but it also comes at the cost of impinging upon one's security and comfort. While collecting loans, online lenders sometimes resort to threats and violence.

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Translator: Fauzi, Raka Adji
Editor: Azis Kurmala
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