The CEO of short term loans company Ferratum, which is majority owned by the Finnish based Jokela company, said that they were expecting massive growth in 2012 based on their 100% growth in customer numbers in 2011.
Jokela said, in an interview with Reuters, that many people did not want to get involved in taking out big loans. He claimed that these led them into debt much more readily than the small loans which Ferratum specialised in.
Several thousand new customers took advantage of Ferratum’s short term loans in the lead up to Christmas last year so that they could buy presents for their family and friends.
Ferratum is destined for rapid growth over the next few years with a target of ten million customers on five continents by 2014, with Europe remaining its core market sector.
Ferratum only started short term loans operations in Britain in July 2011, but already has just less than one hundred thousand customers and has been experiencing double digit profit returns.
The short term loan industry as a whole has seen the benefits of the economic slump deliver them a large market share as millions of Britons have turned to the burgeoning numbers of short term loans companies for a quick fix loan of several hundred pounds at most intended to tide them over until their next pay check goes in the bank. These customers have often been refused a loan by the bigger financial institutions, like banks, because they consider their ability to pay back the loans as being too risky.
Jokela’s CEO, Jorma Jokela, said that concerns about the tendency for short term loans companies to drive low income and vulnerable people further into debt were overrated and commented further that Ferratum’s customers were all employed and were only taking out small loans. He claimed that much of the problem causing rising indebtedness was an inability to cope with much larger loans such as those associated with credit cards.
Ferratum charges a range of interest rates from 300% at the lower end to 3000% at the upper end with a maximum loan in Britain set at ₤350. The loans in the rest of Europe range up to a maximum of €600 (₤500).