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The ‘pinjol’ trap: The horrors of payday loans in pandemic-stricken Indonesia
Many Indonesians are drowning in overbearing loans and intimidation attacks after taking out online loans to survive.
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Easy but dangerous money: An easy and fast process from smartphone-based lending apps has lured many people to borrow money. (Courtesy of Unsplash/Mufid Majnun) (Unsplash/Courtesy of Mufid Majnun)
I
magine the following situation: After being laid off by your employer, you find yourself desperate for money, barely having enough to last you and your family for the rest of the month. You have tried looking for another job, but the pandemic has made vacancies scarce. Your friends and family are not faring well, either, so they cannot help. You are at a loss as to what to do.
And then you see it, an online ad stating "Fast, easy money". You just need to fill in a few details over the phone, and you will get the money to feed your family and maybe pay the bills. You give in. You download the app listed on the ad and follow through with the necessary procedure. Hours later, you receive a notification. A certain amount of funds has been transferred to your account. You breathe a sigh of relief.
You go about your days. A few days later, someone claiming to be a debt collector calls you, cursing and saying you owe the debt collector’s firm an extravagant amount that is nowhere close to the amount of money you originally owed.
Such is the reality for many Indonesians today who have fallen victim to the vicious cycle of debt that comes with online payday loans, whether legal or illegal. In Indonesian, these schemes are often called pinjol, short for pinjaman online (online loans).
Various threats
"I borrowed Rp 1 million (US$70.15) because I had no money to pay my living expenses. That is why I took on the debt. If I could pay it back in installments, I am sure I would be able do it. But if I have to pay it at once, I don't think I can. I don't have enough money."
Such is the story of Joko Purnomo, not his real name. Joko tried to tell the debt collector that he could pay his debt in installments, only to get cursed at and hung up on. Then, he tried again to call another debt collector, but they insisted Joko should pay his debt in full immediately.
