"With interest rates of 17, 18 or even 20%, the cost can be enormous": the hidden face of mini-credits

Your bank account is flirting with the red line, but you want to give a gift or bet on the next football game ... Pull out your smartphone, open the Bling, Lydia or Floa Bank app, and you're done.

In three clicks, you will receive almost instantly a "mini-credit" of 100, 200, 400 or up to 1000 euros on your account.

But be careful: these "small" sums to be repaid in a maximum of three months and supposed to "help out" can quickly, with interest rates of up to 20%, represent a significant burden.

According to our information, these mini-loans, booming since the start of the health crisis, are in the sights of the Ministry of the Economy.

“Their supervision is at the heart of the revision of the European directive on consumer credit, which will make its copy at the beginning of the summer because those who take out this type of credit do not have a perfect knowledge of their total cost. ", Underlines Bercy, who ensures that France defends" a strengthening of the legislation on mini-credits, whose model was built in the heart of a legal breach and attracted many new players.

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They escape the consumer credit law

The Prudential Control and Resolution Authority (ACPR), the policeman of the finance sector, also warns: “Not all players clearly present interest rates. "And for good reason: since the repayment period does not exceed three months and the payment of fees or interest is considered" negligible ", the mini-credit does not fall within the scope of the Lagarde law, which governs consumer credit, and thus escapes regulation. In early May, the consumer association UFC-Que Choisir lodged a complaint against three players in mini-credits (Bling, Cashper and Floa Bank) for “questionable commercial practices”. "These companies suggest that there is no risk in taking a loan," denounces Matthieu Robin, bank and insurance policy officer for the UFC.

Floa Bank, leader in this new market, thus granted 10 million mini-credits in 2020 for an average sum of 533 euros. The former Casino bank can transfer funds instantly to an account in the Lydia mobile payment application, of which it is a partner. Even registered with the Banque de France, the consumer can take out a loan without alerting his banker. "It is the banks which must be vigilant on this subject", sweeps one at Floa Bank.

Attracted by the success of these mini-loans, Lydia has forged a second partnership with Younited Credit (formerly Union Loan), which wants to see mini-loans represent 30% of its activity in the coming years.

To achieve this, the company targets "25-35 year olds, a population very present on Lydia", details Geoffroy Guigou, one of the co-founders of Younited Credit.

Asked about the number of signed credits, Cyril Chiche, the co-founder of Lydia, and Geoffroy Guigou, plead confidentiality.

"The interest rates appear on the website", defends the co-founder of Lydia, who specifies that the first results of "the test phase, open to 1 million people" are "higher" than he " hoped "with" a hundred loans granted every day ".

An increased risk of debt distress for fragile households

The founder of Bling, Pierre-Éloi Acar, believes that consumers should not be taken "for fools" and that they are capable of not entering "the spiral of addiction".

The start-up issues an advance of 100 euros maximum, to be repaid within thirty days.

A priori without interest rate, you still have to pay 7 euros to benefit from the "express formula" and get the money instantly.

"It is not a hidden cost, it is clearly displayed", defends Pierre-Éloi Acar.

Read alsoConsumer credits: with the crisis, the UFC fears an "explosion" of unpaid bills

Faced with the popularity of these new loans, Philippe Chassaing, deputy (LREM) of Dordogne, hears the new players in this market as part of the mission on over-indebtedness, entrusted to him by the Prime Minister. “Sometimes it looks more like disguised debt. With interest rates of 17, 18 or even 20%, the cost can prove to be enormous, ”denounces the deputy, who is campaigning for“ the granting conditions to be strict ”.

The Banque de France, which, until now, has not noticed the impact of these mini-credits in the over-indebtedness files, is taking the lead: “The risk is the accumulation of a large number of small loans. , especially if they were distributed to financially fragile clienteles. In December, the UFC-Que Choisir released a study that lifted the veil on the irresponsible distribution of consumer credit and announced a flood of delinquencies in 2021.