this post was submitted on 31 May 2025
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United States | News & Politics
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According to the article, Klarna posted a nearly $100M loss in Q1. So I suppose people just keep doing what theyre doing, at the expense of their own credit I guess
Characterizing this as the lender’s fault is kind of silly though. Were talking about people buying door dash and cochella tickets on 0% interest credit. If anything its surprising the lenders are stupid enough to offer that in the first place. If you buy door dash on those terms and dont pay it back on time, its hard to see that as predatory in any way. Thats not remotely similar to a subprime loan on a car or a payday loan
I've read about people increasingly using these services not for leisure expenditures like delivery and concerts, but for basic needs like groceries. Salon said 25% of users are in this camp, and meanwhile 78% of Americans live paycheck to paycheck.
Yes, you're right that there's an element of personal responsibility in taking on debt. But the fact of the matter is that most people are pretty low in financial literacy, and also that declining real wages increasingly put people in a situation of using debt to pay for basic needs.
Im certainly aware many people are using it for real necessities too, but even then I take issue with a 0% interest 3-6 month loan being labelled as “predatory”. A 0% interest 6 month loan is borrower-favorable at worst, and downright kindness by the lending company quite frankly. And they dont even really penalize as harshly as they should considering they are basically taking a loss on the initial loan.
And some might say “well they take the loss on the loan to trap people in debt”, but only 17% of their income is generated by penalty payments. Really Klarna is best described as a business that is doomed to fail because its terms as a lender are too kind on borrowers. I just dont see how people can call them a predatory lender. Like yeah, they primarily loan to people who cant get normal credit, but the alternative would be those people having access to no credit. And the terms are clearly not predatory. So I dont see why people are up in arms against them
0% interest is not really accurate in the laypersons sense though. They make money off of “fees” that totally aren’t interest, they’re just the equivalent to payday loan type interest if you calculated the rate. Some are within affordability if you pay quickly but skyrocket after the 90 day mark as well.