In 2015, the Swedes borrowed money like never before because housing prices were high and mortgages were cheap, and in addition, consumer loans are increasing rapidly. Of course, it is not wrong to borrow money if you have a stable income and have no problems repaying what you have borrowed, but unfortunately this can sometimes change, you may become unemployed or sick off and then it can be tough if you sit on big loans.
Yes, the back of the big loan carousel is, of course, the debt, ie the debts that end up with the debt collection companies and the kroner, which then only grows and grows, something that the debt collection companies have earned billions on in recent years.
The collection companies’ turnover
In 2013, the collection companies had sales of USD 3.8 billion, of which almost 30% of this figure is pure profit. Thus, Sweden’s debt collection company made a total profit of just over USD 1 billion this year and since then profits have increased further. And in 2014, the debt collection companies collected no less than USD 28 billion from indebted Swedes and a non-negligible part of this sum went directly into the debt collection companies’ pockets.
Thus, the debt collection companies have made nice profits in recent years and you can clearly see if you look at Intrum Justitia’s former CEO, Mike Stanberg. Wollung had a salary of USD 5 million / year plus bonus, only in 2014 he withdrew USD 17 million in total, and when he retired he received just over USD 15 million in severance pay plus pension. Of course, such severance pay testifies to really big profits.
So what are the collection companies making so much money from?
- Collection fees. When a debt has ended up with debt collection, the debtor must also pay a debt collection fee of USD 180 on the day the debtor pays for his debt.
- Interest. The interest rate is the collectors’ large gold mine. A large debt that has been with debt collection for several years can be as large as the interest rate of debt collection companies is high, then it does not matter if the policy rate and the reference rate are low or not.
USD 76 billion in the debt of the petitioner
At the end of 2015, a total of 433,000 Swedes had a total of USD 76 billion in debt from the Crown Prosecutor, and it probably looks about the same now in January 2016, some debts disappear, new ones are added. Swedes are obviously a very debt-ridden people because the debt balance is a symptom of a too high loan-to-value ratio in households.
Sms loans – not the biggest culprit
Now, in fact, it is not that sms loans are the biggest culprit when it comes to Swedes’ indebtedness, if anyone now believed so. In 2015, people took a total of USD 1 billion in sms loans, and most of them actually repay their loans, but certainly we should not detract that just over 56,000 cases ended up with the crown bailiff in 2014 due to sms loans.
BendMyCredit.com does not know exactly how much the total sum is for the 56,000 cases, but even if it was about USD 6,000 per case on average (which is probably in excess) it would be USD 336 million, which is only approx. 4.4% of the total debt of the bailiff. It may therefore be about 3 – 7% of the total debt balance, but however you turn and turn it, sms loans are not exactly the biggest problem when it comes to Swedes’ debt, although it is also a problem.