Generation z (gen z) and millennials are now facing serious challenges from peer-to-peer lending (pinjol). A report by the Financial Services Authority (OJK) shows that almost 40% of the total bad debts from online loans come from the 19-34 age group.
In 2021, the number of borrowers aged 19 to 34 increased by 30%, and continued to grow to 40% in 2022. In 2023, this figure rose again to 45%, with total loans reaching IDR 200 trillion. This trend is expected to continue to increase in 2024, reaching 50%.
However, the increase in the number of borrowers was followed by a surge in bad debts among gen z and millennials. In 2022, bad debts increased by 35%, and in 2023 it increased to 38%, with around 45% of bad debts coming from the 19 to 34 age group. If this trend continues, it is estimated that by the end of 2024, bad debts from gen z and millennials could reach 40%.
These bad loans are a reflection of a lack of understanding of financial risk. Many gen z and millennials use loans for consumptive needs without considering their ability to repay, especially with high interest rates.
Bad credit from poorly managed online loans can have serious social and economic repercussions. Many young people trapped in debt experience psychological distress, lose personal assets, and face legal action.
Unfortunately, an OJK survey shows that the level of financial literacy in Indonesia is still low, especially among the younger generation. As a result, many make poor financial decisions, including taking out loans without considering the risks.
The problem of bad credit among gen z and millennials signals the need for a proactive approach to mitigate financial risks, particularly in the use of online loans. Credit scoring can help providers detect risks early on, while improved financial literacy is a sustainable long-term solution.
As the generation that will lead Indonesia towards the Golden Indonesia 2045, gen z and millennials must be provided with financial literacy to manage finances properly. hopefully with good financial literacy, it can produce a generation of Indonesians who are great financially and not trapped in debt entanglement.
Source : finansial.bisnis.com
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