“Can’t pay rent? Don’t worry we have an even more humiliating solution for you!”
Can’t pay your monthly rent? We can pay it for you with a monthly payment schedule.
Richest nation in the world.
Klarna 'bout to find out their business model doesn’t work as well in the US compared to the Nordic countries and EU, as
- People are already up to their neck in debt, putting Klarna to the back of the queue in case there’s a default
- Personal bankruptcy is a thing
Especially the Northern Europe personal bankruptcy is really not a thing, fuck up your finances and you’re never going to see a penny you make (above what you strictly need to live) until everything has been paid back. Debt that is actively being collected also never expires.
There’s a good reason Klarna’s been able to thrive in this environment – getting debt from banks is quite difficult and you have added security from the draconian collections process.
In the US a company ignores credit scores at their own peril. The bankruptcy process is one of the few things that works better in the US than in e.g. my home country Finland.
People are already up to their neck in debt, putting Klarna to the back of the queue in case there’s a default
People in debt (before there is professional help) end up paying the important things first (such as rent) and then choose to pay off the debt that is most within their reach. Klarna is much more likely to be a low amount compared to their creditors.
It might be true their loans are more likely to be payed back while also they might have less to loose in case of a personal bankruptcy.
But that aside, i have no clue on whether Klarna is making a smart move. But i assume they are because companies that are both evil and stupid don’t tend to come far.
Klarna is a thing in Germany as well and personal bankruptcy absolutely is a thing here [https://www.verbraucherzentrale.de/wissen/geld-versicherungen/kredit-schulden-insolvenz/privatinsolvenz-in-3-jahren-schuldenfrei-11417] so I don’t know if your second point is that relevant. I’d agree on the first one though.
Serves me right for assuming Germans had a similarly judgemental attitude to people who have ruined their finances. Thanks for the correction.
Finns often have a very puritan attitude to debt (you should fear it like the devil), and in the common discussion it’s often attributed to the ethics of the Lutheran church. That’s at least partially the reason we still don’t have a real personal bankruptcy option. Somewhat surprising to me that a country that shares that value system could be that forgiving to people – I’m a bit envious even 😅
Around here Klarna and other similar companies have long been seen as exploiting the fact that debt is really difficult to get through proper sources, and there’s a matching draconian bunch of collections agencies to support that business model. We’ve mainly been trying to tackle this by regulating the process of giving out loans, instead of giving people the necessary way out and thus giving the corporations an incentive to self-regulate.
If bad credit is actually no longer possible to collect on, it ceases to be good business. Hats off to Germany for having a proper route out of predatory loans.
Is there a good article about this?
I’ll try to find some and link, but I’m not sure if there are good ones.
Rent money to rent apartment
Great idea
How much later? Can I get 50 years on that cause I’m gonna take that option.
Sell 100-year bonds to Klarna and use the money to pay your installments.
Financing is bad at the best of times.
No, it’s not. Financing is a great tool, and used wisely and with knowledge of interest rates and total cost, can elevate you quite a bit in life.
This however is predatory lending, and it should not be used ever.
Predatory lending in the vast majority of developed economies other than the US:
Adjustable rate home mortgages being issued to financially illeterate people without extremely clear and emphasized risks and disclosures.
Same thing with HELOCs.
Vehicles loans with rates over 15%.
… subprime lending basically just is predatory lending that we don’t legally call predatory lending.
Oh and then of course there is the entire system of Private Credit Shadow Banks who issue trillions in loans to all kinds of business entities, who basically aren’t required to do anywhere near the level of accounting rigor or transparency that actual banks do.
We just basically don’t regulate them.
Care to explain? I got raised differently and avoid financing like the plague, but I’m coming to the realization that I won’t be able to do that forever.
How do you think it can be a net positive? Your insight might help me cope.
I bought my first apartment when interest rates were around 1% (the 2010s were wild). I paid 30% less every month to the bank than a comparable rent, utilities excluded in both.
On top of that, the payment was 40% interest and 60% went towards the principal, so basically investing.
To put it in numbers, imagine the apartment you like is 1000 euros a month in rent. You decide to buy. Now you pay 700 euros to the bank each month, of which 300 is interest and 400 is paying down the loan, so you will probably get it back if/when you sell it. You “lose” 300 euros am month instead of 1000.
Another example, buying a car to go to work (or any other tool). If you don’t have cash but need a car, getting a loan and being able to work is better than not having debt but being unable to work.
Think buying an apartment on credit vs renting it. The apartment bought on credit you’ll eventually own, but not the rented one. So assuming you need an apartment, buying on credit can easily be the better decision.
This is a financially naive and reductionist take, approaching financial illiteracy. Applied correctly, financing allows you to preserve liquidity while still leaving funds in accounts with higher returns. Financing also provides a hedge against inflation, e.g. real estate.
Financing also literally causes or just is monetary inflation, in a debt-based fiat currency system.
Those with access to credit leverage it and prosper roughly proportional to their level of credit access, those without access to it pay the inflation tax and suffer.
This is why capitalism has bubble/pop cycles, inherently, systemically, unavoidably.
When your home is functionally your own personal bank, you want home values to keep going up… which necessarily causes less people to be able to afford homes, and in a society based on access to credit being necessary to ‘buy’ a home, this creates and exacerbates a class divide.
(You really haven’t ‘bought’ your home untill you’ve fully paid off the mortgage, untill then you’re more or less doing a complex rent-to-own from the bank.)
Its also why you get ‘too big to fail’ banks and other entities… they have a bunch of bad debt, and if they are forced to actually account for it, well that would mean so many write offs that it would massively decrease the money supply, which is a recession/depression.
The same dynamic is at play with college costs.
More financialized, more loans? Prices go up. Less people can afford college, or in our lovely system where student loans are not dischargeable in bankruptcy, more people become literal debt slaves.
Same dynamic is also at play with vehicles, cars.
… real estate is only a hedge against inflation in a society that is stratifying, becoming more inequitable.
If that’s your inflation hedge strategy, you must understand that mass broad usage of this strategy actively causes the impoverishment of those who can’t afford super-inflating home prices.
Super-inflating home values is the Boomers climbing a ladder, and then once they’re on top of it, constantly pulling that ladder higher, further and further away from the ground, from all their kids.
I completely agree with everything you said, both in this response and your response to Scrubbles. I also appreciate your long-form responses in both.
This is, however, the system in which we live. There is no ethical consumption under capitalism. Choosing to pay cash for big ticket items, real estate, and durable goods when other accounts/portfolios earn more interest than the financing… that’s just throwing money away. If your laddered certificates accounts earn >3.5% and you can get 0% or 1% automobile financing (and you need a vehicle where you live), I don’t think anyone would choose to burn that much liquidity.
You really haven’t ‘bought’ your home untill you’ve fully paid off the mortgage, untill then you’re more or less doing a complex rent-to-own from the bank.
Agreed. My options where I live are primarily rent or mortgage; there are intentional communities with equitable arrangements, but the waitlist is 5 to 10 years. And with rents here going up at about 8% to 12% per year, I chose the 3.7% mortgage. FWIW, most home sales in my area are industrial investors or second homes, which absolutely underscore your points regarding livability, financial violence, and <waving around> all this shit in which we live.
real estate is only a hedge against inflation in a society that is stratifying, becoming more inequitable
Again, fully agreed. Inflation is here. None of us are going to wish away inflation or predatory lending, because primate brain and “they” have our number. If one has interest rate arbitrage available, using it prudently leaves more disposable income, and therefore more time to strive for more equitable systems. For example, I am the treasurer for my regional timebank, and among my offered services are financial literacy, budgeting, and household bookkeeping. This won’t surprise you at all: it’s my most used offer (>100 hours used) and the number of people lacking these skills… it’s almost like this system is designed for a certain scope and scale of financial ignorance.
If that’s your inflation hedge strategy, you must understand that mass broad usage of this strategy actively causes the impoverishment of those who can’t afford super-inflating home prices.
And yet an individual has to “play the game” to avoid falling into poverty. I’m not sure what else could be done here. Anyway, privilege begets privilege beyond all else, and at the end it’s mostly luck of the draw.
I literally took out a mortgage to buy my house. That’s financing.
If I lose my job and I’m not able to find another one then the bank will repossess my house, but that doesn’t make my purchase of my house a financially irresponsible decision. The repayments on my mortgage are considerably less than the rent that I used to pay, so I am much better off now than I was previously. Anyway I would have lost my rental had I stopped paying as well, so nothing’s really changed.
bro. Fucking – Think about it. Klarna pay in 3 installments divide the cost by 3 and take payments monthly. Month A, you pay one third. Month B you pay one third of months A and B. By month C onwards you’re consistently paying three thirds or 100% of the rent. You’d only defer yourself the value of one month’s rent over the span of two months. Pointless.
Unless they are using the “Klarna Glitch” (see Identity theft)
https://frankonfraud.com/the-klarna-glitch-that-isnt-inside-the-new-viral-trend/
That’s how fucked our economy is. There is a significant number of people so close to the edge that buying an extra 10 days before eviction is the final gasp before becoming homeless.
Yes. Previously the alternative was payday loans, which charged exorbitant interest rates.
People have tried to ban these sorts of predatory loan businesses before but it usually forces people into the hands of organized crime loan sharks who charge even more exorbitant interest and exact brutal punishments on people who don’t pay up.
which charged exorbitant interest rates.
Same goes for Klarna if you miss payments.
They should be illegal. The literal only difference between these ‘services’ and the mob is they typically don’t break your knees.
But that’s not the only despicable thing about the mafia’s racket.
These people squeeze the last blood from people who often become homeless anyhow; whereas if landlords had souls, many people could at least keep their housing and not be so vulnerable to predators.
That’s how you keep score in bowling.
And isn’t there interest when doing this as well?
No, but there are fees for late payments and other special situations.
Their main income is from the transaction fees that they charge the merchants.
The idea is that people who don’t have money can spend money and create a transaction fee on a sale that wouldn’t otherwise have happened if they didn’t lend the money. That way it’s the same as a credit card that you only pay monthly.
The difference is that the payments can be split, so that the customers can … uh … utilize their entire credit maximum every month…
Needless to say, this kind of credit maximum optimization can end really badly for people who have unstable incomes. The same kind of people who might be tempted to use it.
Yeah, exactly. It’s very predatory.
I don’t think I’m their intended customer demographic. 😅 I use it to keep a tight check on all my purchases. Recently started doing the monthly invoice thing as well, so neat and tidy. One payment every month, then rearrange money in our bank accounts as needed based on shared economy with the wife. Bish bash bosh.
I lost interest after like the second sentence. Sounded too much like a middle school math problem.
Yikes, alright, good luck
Oh my yes!
Fwiw there’s no interest on Klarna where I live 🤷
And where is that? 🤔
Where I live there’s a bit of interest when you postpone your payments further than 30 days. Other than that, no interest. Just like a regular credit card.
Maybe it’s something past 30 days. I haven’t used anything past that. Suppose I talked out of my ass a bit.
😄 No worries mate
Yet more proof that “richest country in the world” doesn’t mean what Americans think it means.
It means they have the most rich people to devour if they would just get off of their asses.
fattiest?
People already put rent on their credit card to pay it off in chunks. This is just Klarna tapping in that market
My credit card gives me 3% on rent. So I just put it on the card on the first, pay it off on the second. Give a 3% discount on rent every month. Lol
Take what you can, give nothing back.
People already put rent on their credit card to pay it off in chunks. This is just Klarna tapping in that market
People using CC to pay rent isn’t reassuring, it’s more alarming. Paying for housing on short-term, high-interest credit is financial insanity and implies profound dysfunction if not desperation.
You mean to say a very quick and hard market crash, like we haven’t seen in a century or so.
Well if you don’t pay they can evict you very fast. So if you need the money yesterday you have to accept 12%pa
Hence the implied desperation
I think the intention was to get the points. But, I’m sure some are not as diligent as they should be.
You get charged a 3% transaction fee for using a credit card, which more than wipes out the value of any points you might earn.
Tap for spoiler
(Excluding the Bilt card, which used to let you earn 1% on rent and they processed it like an ACH/bank debit, so no credit card fee. But they recently restructured their rewards and it’s not nearly as easy to profit now.)
Not every card gets charged a 3% mine for example doesn’t. I get 3% back on rent, housing and insurance on my card. There’s no fees involved. So it’s just a flat 3% discount.
Pay rent with card in the first, pay it off on the second when it posts.
Well, don’t leave us hanging, which card is that?
X1 used to give 3 points and my buddy’s rental house charged a 2 and change percent fee. He could only get full point values certain places so he’d save up all the points and that was his Christmas fund. He’d bank $600/yr ( about $500 real dollars from paying the transaction fee plus the extra hundred-ish bucks in points he’d get for free). They recently went to a 1.5 point model but kept the restrictions on where you could spend to get the full point value. Guess what card of his never gets used now.
I was thinking about that Bilt card.
I had to do this when I turned 18. Now I’m in $2k of debt.
thats less than rent so nice
I tend to forget that salaries are paid weekly in the US. Then this makes at least somewhat sense.
Almost fucking no where does weekly pay. It’s 99% bi weekly with a rare monthly here and there.
It’s probably like 98% every other week/twice a month, 1% monthly, and 1% weekly.
Not typically. Every other week is more common.
Well, I’m used to monthly, both for rent and for salaries. So biweekly is still strangely often to me.
But thanks for correcting me.
Monthly or biweekly are both common in the US for salaries. And biweekly being the most common for hourly. Really just depends on your employer.
But, bills always come in monthly, which makes the monthly budgeting simple. A biweekly bill would fuck over a bunch of people as occasionally it would hit three times in a month.
Really just depends on your employer.
specifically, in statesia it depends on: the size of your employer (how many employees they have) and whether you have a union that has negotiated a specific pay term.
source:am expert, i think it’s in publication 15B
I’m not sure how common it is, but my employer (in the US) runs on a twice monthly payroll system.
But then why isn’t rent paid weekly?
Where I live, weekly or fortnightly pay is more common than monthly, and rent is almost always paid weekly.
But then why isn’t rent paid weekly?
rent is almost always paid weekly.
Did you mean monthly in that last sentence?
The first is referring to the US, the second to where Dave lives (I assume New Zealand).
You said it makes sense that in the US people get paid weekly (and pay rent monthly) so having a service that lets you pay rent off each week makes sense.
I’m asking why in the US people don’t pay rent weekly. Where I live it’s the most common way of doing it.
Us people get paid bi weekly like 98% of the time. Weekly pay is basically unheard of.
I’m asking why in the US people don’t pay rent weekly. Where I live it’s the most common way of doing it.
Basically all bills in the US come in monthly. Keeps the number of transfers, letters, and emails down. And as everything is on the same schedule, it works pretty well.
A biweekly bill would fuck over a bunch of people as it would occasionally come in three times in a month; necessitating a larger amount of cash on hand to account for these months. (And people are, overall, really bad about having any cash on hand)
Edit: Rejiggered the comment a bit
Edit 2: People get paid in the US either monthly or biweekly.
People get paid in the US either monthly or biweekly.
Ah, this is different than the other comment implied. They said:
I tend to forget that salaries are paid weekly in the US. Then this makes at least somewhat sense.
A ton of property management companies charge like 3-5% “convenience” charge for using a credit card, meaning even with cash back you lose some money.
Given that those fees are typically meant to cover processing fees and credit cards typically offer rewards because they effectively give you a cut of the processing fee this would make sense.
Of you pay rent on credit, you should move into a cardboard box. I would.
Dystopian fucking timeline. Around every corner there seemingly waits billionaires waiting to fuck ppl over
I’m no Maoist but those ‘land reforms’ are starting to sound pretty good right now.
Hell yeah killing millions of innocent people and starving 50 million more because you dont like a Swedish finance app
i just want to shoot sparrows okay
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The first four words of my comment were “I’m no Maoist” quite clearly signaling that I don’t affiliate myself with Maoism.
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The rest of my comment was in reference to Mao’s Land Reform Movement (i.e. those oh-so famous landlord killing memes). You’re thinking about Mao’s Cultural Revolution and The Great Leap Foward which were separate incidents that did, indeed, kill and starve many innocent people. Mao was tyrant and despot but no one, absolutely no one, missed the landlords. Well, maybe, expect the ones that fled to Daddy Chiang.
This goes beyond not liking a Swedish finance app. This is about the dystopian absurdity of financing your rent payment. It sounds like a plot point from a William Gibson novel. You’re borrowing money, that you’ll have to pay back with interest, to have a roof over your head; a roof that is not even yours. Klarna would very happy to lend you that money so they can profit from debt and the landlord(s) will be happy because they’re still making money without providing value. You don’t have be Marxist to see why this is a problem.
i dont affiliate myself with Mao but here is why murdering land lords was actually a good thing.
Bro read the history trying to defend that is gross.
It seems you hate the american lack of welfare not Klarna. Unless your issue is that poor people have access to credit? I think thats their right and it would be fucked to deny them that. If we compare the situation with klarna vs without they miss their rent payment.
Even in countries where you lose your job and the government gives you money and pays your rent these people would still spend irresponsibly and get into debt.
Found the landlord apologist lol
Yeah people shouldnt be murdered for owning property crazy take I know.
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Americans aren’t doing exactly that right now to Palestinians.
Did you mean to say Isrealis?
Those who made Usury mainstream now control the western world and bomb people who still don’t do Usury.
So what happens if you keep leveraging klarna on klarna on klarna and then just buy a van, skip the bill, and go off grid?
Your face gets put on Smoobly, the bounty hunting app.
You just made that up. No way there is an app like that called Smoobly
Don’t take my word for it, read the reviews on Phloorf the crowd sourced app review app!
Buy a van for what money if you are so stretched financially you need Klarna?
Buy it with klarna ofc
My dad paid 140k to buy a lot and build a house about 25-30 years ago. It’s back up for sale…$475k. in that time, minimum wage went from $5.15 an hour to $7.25 in that save time frame.
People are still working 40+ hour weeks, and healthcare is somehow costs MORE, along with everything else.
I don’t fucking think immigrants had anything to do with any of that.
The role immigrants play is involuntary, so blaming them is asinine. But they do fit in the equation. An average American has little to no financial security (by design), leaving many in a constant state of desperation. If anything, immigrants are even more desperate to make a living away from whatever situation they were trying to get away from, thus willing to accept even lower pay. But on top of that, many are manipulated into a situation where they are trapped in an “illegal” status and forced to accept sub-minimum wages or get deported.
Make no mistake, the vast majority of immigrants arrive here legally, but are then victimized by our capitalist class. And in the end, they get blamed for the situation. Fuck that.
The class divide all over the world needs to be destroyed. But that will require solidarity amongst the worldwide working class who have been brainwashed into a completely illogical fear of their peers, just because of an imaginary line drawn by sociopathic fuckwit pedophiles, who do not, and never have, deserved anything even resembling respect.
