SMS-lån Overview

SMSlån is a Swedish term that refers to a type of loan, known in English and translated to be SMS loans, or fast loans.

22:22 13 August 2019

These loans are often confused with or considered to be micro loans, when in fact that is not the case. SMS loans are totally independent and unique type of payday loan.

So what exactly is an SMS loan?

An sms lån, or in English, a ”fast loan”, or ”SMS loan” is a quick loan for a small amount. These loans are relatively unique to Sweden and the Nordic region. The loans are offered by different creditors and are relatively easy to obtain. As the name “SMS” loan would suggest, these loans can actually be applied for and borrowed directly from a borrower’s phone or from a website. A text message is all it takes to get these loans. The trade off is that the cost of the loan is higher, however, it is quick to get and the loan period is often relatively short.

How much can I get?

When you apply for an SMS loan, you can expect to be approved and given an amount ranging from 500 to 3000 SEK, which equates to approximately 50 – 300 USD. The interest rate for these loans, due to their small amounts, higher risk and shorter periods, can be over 700 %. Though this may not be the explicit interest rate, and it may be advertised as interest free. There are fees associated with these loans, and this is where you will see the cost of the loan start to add up. One of the most notable interest rates for one of these fast loans was upwards of 75 000 %.

Regulation of SMS Loans

These loans have existed for some time now, and have been relatively heavily regulated since July 2014. They fall under the same act as most other Swedish consumer loans. The act aims to protect both the lender and the borrower. The act provides measures to ensure that the lender complies with other regulations, does not violate borrower’s rights or freedoms, or break any other laws. Further, it protects the lender and provides measures against issues like illegal transactions, money laundering and other illegal activities that one might seek this type of loan for.

In order to offer this type of loan, lenders and creditors must receive the appropriate permit- It can be obtained through the Swedish Financial Supervisory Authority, a financial regulatory body in Sweden. They provide the permits, but can also revoke them should circumstances require it.

History of the SMS loan

This type of loan was established in 2006, and it was unregulated for nearly 8 years before there was any law or measures in place in 2014. The phenomenon took off as consumers found the idea of having their money within 15 minutes of applying for it appealing, regardless of the fees associated. Today, these loans are offered in most Nordic countries, including Sweden, Denmark, Finland and Sweden. In most of these places, there are similar laws and regulatory measures in place.