SMS Loans. Turning Your Mobile Phone Into a 800 Percent Interest Rate Debt.

If you thought payday loans might be a problem, abused, and be too readily available to those that can least afford it, then you need to learn about SMS loans or text message loans.

A SMS is a text message sent from a cellular or mobile phone. In some parts of the world, consumers can enter into payday loans just by sending a text message from their phone.

SMS loan providers say consumers can be approved for the loan nearly instantly and have funds deposited in their accounts in as little as 15 minutes.

For those in financial trouble and desperate for some loan, it’s going to be a very attractive lure to borrowing money that many not be affordable, but easily accessible.

One company in the UK, Nextcredit, shows how little it takes to apply for the loan.

  1. Simply text the word LOAN followed by your surname [first name] to [number] i.e. LOAN JOHN
  2. Simply REPLY to the text we send you with the word LOAN followed by the amount you need 100, 200, 300 or 400 i.e. LOAN 300
  3. The last text confirms that the payday loan money has been transferred- It’s that simple. – Source

The easy access to SMS loans tends to attract a more cell phone oriented demographic. In Sweden 35.9 percent of SMS loan borrowers were between the ages of 18 and 25.

A similar system in South Africa makes it easy for anyone with a mobile phone to apply for these loans. If you are a client of a loan company, all you need to do is send a text message with your requested loan amount and once approved the money will be available for immediate withdrawal.

While offering a potential benefit of being able to borrow money easily, certainly the costs and terms of these loans would need to be made readily apparent for the consumers to even have a hope of being aware what financial commitment they are making.

See also  Payday Loans and Cash Advances

The potential for abuse of these SMS loan is enormous.

Some countries, like Finland, do have rules and regulations concerning these loans. According to a report from the Finish Consumer Agency, marketing of SMS loans must disclose the annual percentage rate of the loan. Not every country requires this. And annual rates for these loans can be 800 percent or higher.


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Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
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