Online loans are financing facilities provided by financial service providers through digital platforms, such as websites or mobile applications, which allow the entire process of applying, approving and disbursing funds to be done online.

These loans offer ease and speed of access, where borrowers only need to fill out an application form and submit the required documents through a digital platform without having to visit a physical office. Typically, online loans have easier terms and a faster approval process compared to conventional loans, often within hours.

Online Loans as a form of monetary lending service provider in order to provide an easy method for people in need. This method is also a form of Fintech-based services or what is known as finance technology. Fintech itself is the result of a combination of financial services and technology, which allows changing the concept of conventional or face-to-face transactions to online. The development of Fintech since the COVID-19 pandemic is arguably very rapid in Indonesia.

According to the Financial Services Authority (OJK) in 2021 there were 20,874,456 active online loan service users throughout Indonesia. This number is still increasing every year with the increase in users of online loan features. Online loans can be found through many online sites, a large number of which are outside the control or monitoring of the National Cyber Security Agency and OJK. Apart from the potential of online sites, payment features such as Paylater can potentially become an alternative to online lending services because the Paylater feature is an instant lending method with very minimal interest (Sidabuntar, 2020).

The Paylater feature has become popular quickly due to technological advances in the commercial and payment fields in giant e-commerce media such as; Tokopedia, Shopee, Traveloka, Bukalapak, Kredivo, Akulaku, Gojek and others (Prastiwi, 2021). In addition, many commercial promos are present directly on the homepage of smartphone users through AI algorithms according to user preferences, making this easier to access loans.

Regarding the many online lending sites that often appear rapidly, in 2016 there was no strict application of the law regarding online lending. Therefore, when OJK issued Financial Services Authority Regulation Number 77/POJK.01/2016 concerning Information Technology-Based Money Lending and Borrowing Services. In the regulation OJK provides terminology related to online lending as follows; “Information Technology-Based Money Lending and Borrowing Services is the organization of financial services to bring together lenders and loan recipients in order to conduct lending and borrowing agreements in rupiah currency directly through an electronic system using the internet network.”

However, there are several weaknesses in the application of this regulation. First, there are no witnesses who make the deed under the hand so it will be difficult to prove it. Secondly, if one of the parties denies or denies his signature, then the truth of the underhand deed must be proven before the court.

Among the many features and accessibility of providing online loans at low interest rates from several lenders, the psychological traps that exist in the form of FOMO (Fear of Missing Out) and following the trends of Generation Z are the main factors for the number of Generation Z who are trapped in online loans.

Generation Z is the easiest target in the online lending trap because they are digital natives who are very familiar with technology and often rely on the internet and mobile applications to fulfill various daily needs. This habit makes them more susceptible to aggressive advertisements and promotions from online lending services on various digital platforms.

In addition, many members of Generation Z are still in the early stages of their careers, often facing financial pressures, and have limited financial knowledge, making them more susceptible to offers of quick loans with easy terms. Their lack of experience in managing their finances and understanding the risks of high interest rate loans or unethical collection practices makes them more susceptible to falling for harmful online lending schemes.

Dian Nusantara University itself, where many of its students are aware of the potential and irregularities in many online loans with various gimmicks, plays a role in spreading awareness of online loan cases. Ease of access and fast processing can be a double-edged sword, especially for younger generations such as Generation Z who tend to be more vulnerable to the pitfalls of high-interest loans and aggressive collection practices. Hence, it is important for Generation Z to maintain emotional stability and learn to resist the many accelerated trend changes.

(Kornelia Johana / Humas UNDIRA)

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Biro Humas & Sekretariat Universitas Dian Nusantara

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