In 2014, it was estimated that fifty thousand people in Estonia had gotten into trouble with instant loans, and the total number of people who had taken out instant loans was estimated to be between 130 and 180 thousand. In 2023 a later assessment estimated that the figure of people in trouble with payments had declined to 83 thousand. According to statistics from the Bank of Estonia, although the share of consumer debt has decreased, the overall debt amount continues to grow.

“I don’t know anyone who knows anyone who is a debtor.

Many people probably wonder where these 50,000+ people have fallen into the debt trap. Unfortunately, people are not willing to talk openly about their finances, let alone about debts they have incurred.

A debt burden is like walking into a swamp – the farther you go, the harder it is to get out dry later. Once you’re in debt, it’s very easy to get caught in a cycle of borrowing or a debt trap. And it all usually starts with good intentions.

Obviously, no one plans to go into debt when they take out a loan. Most people are well-intentioned. However, people often end up in debt due to poor planning, miscalculations, or simply a combination of bad luck.

A debt trap is a cycle of borrowing where a person who has taken on a loan that is too much for them takes on even larger obligations in an attempt to pay off their old loans on time. They are afraid to admit the problem to themselves, let alone to anyone else. In an emergency, people take out loans too quickly, without thinking, and at even higher interest rates. But for a debt addict, a fresh injection of money only helps for a moment – until the next payday – because every new loan must also be repaid one day. This is how people get into huge debts, which is no longer easy to escape independently. For debt counselling, you can turn to the Estonian Debt Counseling Association.

“For someone caught in a debt trap, a new injection of money only helps for a moment – until the next payday.

Therefore, you should be careful. Don’t borrow too easily. If possible, avoid using SMS and other quick loans altogether. Quick loans are often offered for a short period as “free” or without interest. However, such offers aim to create a habit of borrowing. However, the costs of taking out subsequent quick loans and delaying repayments are usually very high for the borrower. It is wise to get rid of a loan obligation previously taken too expensive as quickly as possible. If there are no other alternatives, it is worth looking for refinancing loans with the lowest possible annual percentage rate.