Recently there have been some commotion in the financial newspapers in Norway regarding consumer loans.
Loans that easily reach 17,5% interest and most of the consumers of these loans are young adults in their "getting established phase".
In only seven years the amount of such loans have doubled and is now peaking over 100 billion Norwegian kroner, this is a explosive growth in few years.
More and more companies have established businesses dealing with consumer loans, businesses that earlier only sold merchandise. They are basically selling bad loans to costumers.
The investors are making big bucks on these loans because of the high interest and the accessibility to these loans, the marketing of consumer loans are insane.
To understand how bad it is we got a example in store, Norwegian which has been and primarily is known as a Airline. Norwegian bank which is a newer company run by that airline is more worth than...the airline.
You can't watch 30 minutes of television without getting advertisement shoved down your throat.
The problems with the loans isn't the fact that the consumers get fucked over because most of the consumers know what devilish deal they are signing. But when people stop paying their loans, that's where we meet a problem. If only 10% of these consumers stop paying their loans it will have a impact on the country's economy and the housing market.
Many of you picture all Norwegians as rich, cause that's basically how the country has been advertised over the years but this is no where close to truth.
As we see in many countries, young adults are getting the sharp side of the blade. It's impossible to get on the housing market without rich parents or other relatives helping you out. The price index is rising faster than the salary, meaning that food and commodities have increased in price but your salary hasn't. You cant buy that much anymore, you make the same amount but your money is worth less.
It's now under consideration to lock the interest on consumer loans to make it less profitable, but i think that by doing so you are "solving" the problem in the wrong end.
The reason why young adults need to takes such loans is what must be fixed.