Consequences of Defaulting on Online Loans in Indonesia

Legal and Financial Implications

Defaulting on online loans in Indonesia carries substantial legal and financial consequences that borrowers must understand. The Financial Services Authority (OJK) has established clear regulations regarding the maximum allowable interest rates and penalties through SEOJK No. 19/SEOJK.06/2023.

Accumulating Interest and Late Fees

The OJK regulations specify different interest rate caps for various loan types:

• For productive financing: 0.1% per day until 2025, reducing to 0.067% per day from 2026
• For consumer financing with tenor < 1 year: 0.3% per day in 2024, 0.2% per day in 2025, and 0.1% per day from 2026
• Maximum late fees similarly structured: 0.1%-0.3% per day depending on loan category and year

These rates create a compounding effect where longer delinquency periods result in significantly higher total debt burdens for borrowers.

Debt Collection and Legal Protections

When loans become delinquent, lenders can engage third-party debt collectors, but only those that are:

1. Legally incorporated
2. Officially licensed
3. Certified by OJK-registered professional certification bodies
4. Not affiliated with the original lender

The collection process must adhere to established norms, prohibiting threats, harassment, or violence. Borrowers retain legal protections even when delinquent.

Credit Reporting Consequences

All licensed online lenders must report borrower data to OJK's SLIK (Financial Information Service System). Default records are classified across five credit quality categories:

1. Current
2. Special mention
3. Substandard
4. Doubtful
5. Loss

A 'Loss' classification has long-term consequences affecting:

1. Future credit access - Banks and financial institutions check SLIK before approving new loans
2. Employment screening - Particularly in financial sectors where integrity checks are routine
3. Business partnerships - Vendors and merchants often use SLIK data for due diligence

Preventive Measures and Best Practices

Borrowers should understand their obligations and the consequences of default. Maintaining communication with lenders and seeking restructuring options when needed can prevent escalation to default status. Understanding OJK regulations helps borrowers navigate their rights and responsibilities in online lending agreements.