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Explore the phenomenon of online loan (pinjol) defaults in Indonesia and their impact on society. Gain deep insights into financial risks, safety tips, and a list of legal online lenders. This is a complete guide to understanding Indonesian financial culture.
In recent years, the term pinjol or online loans has become a hot topic in Indonesia. Many people have been helped by online loans, but many have also been trapped in financial problems due to defaults.
This article will discuss the online loan phenomenon in Indonesia, its impact on society, and how foreign students can understand Indonesia’s socio-economic reality through this phenomenon.
What is Pinjol and Why Is It Popular in Indonesia?
Legal online loans (pinjol) are digital financial services registered with and supervised by the Financial Services Authority of Indonesia (OJK). These platforms offer a fast and flexible application process, suitable for urgent needs such as daily expenses or small business capital. Online loans provide a deep insight into the lives of modern Indonesian society. These services usually promise:
- A fast process (even less than 24 hours)
- No collateral
- Only an ID card (KTP) and phone number are required
The Difference Between Legal and Illegal Online Loans: Characteristics and Examples
Legal and illegal online loans have significant differences. Here is a comparison:
Legal Online Loans​
- Characteristics: Registered with the OJK, transparent about interest rates (usually 0.1–0.4% per day), and have official customer service.
- Examples: Kredivo, Akulaku, Tunaiku.
- Advantages: Personal data is protected, and debt collection processes are compliant with the law.
Illegal Online Loans
- Characteristics: Not registered with the OJK, very high interest rates (can be >1% per day), require excessive access to your phone, and have intimidating debt collection methods.
- Examples: Apps like “Pinjam Yuk” or “Rupiah Cepat” (which often lack official permits).
- Risks: Data misuse, threats, and financial loss.
To ensure legality, check the list of official online lenders on the OJK website.
List of Legal Online Lending Fintechs Registered with OJK in Indonesia
The OJK regularly updates its list of legal online lenders. Some examples of trusted platforms include:
- Kredivo: Offers instant credit for online shopping.
- Akulaku: Suitable for installment payments for goods without a credit card.
- Tunaiku: Provides cash loans with a fast process.
- Cicil: Focuses on education financing and student needs with flexible tenors.
Important: Always verify the legal status of the platform through the official OJK website at ojk.go.id before applying for a loan.
The "Digging a Hole to Cover a Hole" Problem
According to data from the Financial Services Authority (OJK), as of December 2023, there were more than 100 officially registered online loan providers in Indonesia. However, beyond that, there are still many illegal online lenders that are not supervised by the government. In June 2025, the 90-day default rate (TWP90) reached 2.85%. This indicates an increase from the previous year, with total outstanding loans reaching Rp82.59 billion in May 2025.
Why do so many people use them? Some common reasons are:
- Insufficient salary for monthly needs
- Need for quick business capital
- Emergencies (illness, accidents, etc.)
- Lack of access to banks
State institutions like the Ombudsman of the Republic of Indonesia have spoken out. In a Public Discussion on the Prevention of Maladministration and Law Enforcement against Crimes in the Banking Sector held on May 8, 2025, Ombudsman member Yeka Hendra Fatika explained that the majority of online loan providers still do not have a cross-checking system between applications. As a result, prospective borrowers can easily access many loans simultaneously. This triggers the phenomenon of “digging a hole to cover a hole,” where a person borrows from app A to pay off debt on app B, and so on—until they are trapped in a debt cycle that is difficult to recover from.
This is what is called “digging a hole to cover a hole”—and ultimately leads to default.
This phenomenon shows that online loans have become a part of the economic life of the community, especially the lower-middle class. But not all users understand the risks involved. Behind the convenience, various new problems arise, such as high interest rates, aggressive debt collection, and default cases.
The Phenomenon of Disturbing Advertisements and Collection Calls
If you live in Indonesia, you may often see online loan ads on social media, YouTube, or even receive calls offering instant loans. This is an aggressive marketing strategy by online loan providers.
As a writer, I once received more than 5 calls in a week from unknown numbers offering loans. Online loan ads even appeared in the middle of cooking videos or news! This made me understand how aggressive online loan marketing strategies are in Indonesia. In fact, according to a report by the Ministry of Communication and Informatics (Kominfo), throughout 2022 they blocked more than 5,000 illegal online loan sites and apps.
For many citizens, collection calls from debt collectors are a source of stress. Sometimes collectors also contact the borrower’s phone contacts. This, of course, violates privacy, but it still often happens—especially with illegal online loans. Aggressive collection practices often occur with illegal online loans, which cause psychological trauma for the victims and their families.
The "Hit and Run" Case in the Online Loan World
The “hit and run” phenomenon in the context of online loans refers to the practice of borrowers intentionally not paying back the loan and “disappearing” from contact.
However, this strategy is very risky. Illegal online lenders often use aggressive collection methods, such as:
- Spreading personal data to the victim’s contacts
- Threatening family and friends
- Spreading slander on social media
Many people do not understand the legal and administrative consequences of defaulting. In addition, “hit and run” cases also tarnish the reputation of society in general. As a result, many people become afraid or hesitant to use digital financial services that are actually legal and safe.
The Impact of Defaulting on BI Checking and Its Consequences
BI Checking, now known as the Financial Information Services System (SLIK) of the OJK, is a record of a person’s credit history. In everyday language, Indonesians refer to it as “bad BI Checking” when someone has a bad credit history. Undisciplined online loan defaults will negatively affect this score.
BI Checking Score Categories
According to Bank Indonesia, credit score categories are divided into:
- Score 1: Smooth (credit can be granted)
- Score 2: Under special attention
- Score 3: Less smooth
- Score 4: Doubtful
- Score 5: Delinquent (blacklist)
Legal Collection Stages:
- Reminder via SMS/phone (1-7 days late)
- Formal warning letter (8-30 days)
- Visit to the borrower’s address (31-90 days)
- Report to the Bank Indonesia SID (Information System Debtor)
- Legal process if needed
If you default for more than 90 days, your data is entered into the Fintech Data Center blacklist, and after 180 days, the status becomes “delinquent credit.” The impact is serious: it is difficult to apply for bank credit, a mortgage, or even a credit card. Some companies even check SLIK during recruitment, making job searching more difficult.
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According to Bank Indonesia, a bad credit score can last up to 24 months after repayment. This means that even if you have paid off the loan, the bad record can still affect your financial future.
Can a Blacklisted Status Be Repaired?
The answer is: yes, but it takes time and commitment. For legal online lenders supervised by the OJK, collection still follows legal rules. Customers can still negotiate, for example, by restructuring the loan.
If you have already been put on the BI Checking blacklist, here are the steps to fix it:
- Pay off all outstanding loans.
- Request a letter of a payment completion from the online loan provider.
- Submit an application for data update to the OJK SLIK (Financial Information Services System).
- Wait for the verification process (usually 1-2 months).
- Maintain a clean credit history going forward.
Recovery Time
According to Bank Indonesia regulations, negative data in the SID will be automatically deleted after:
- 2 years for debts under Rp50 million (after they are paid off)
- 5 years for debts over Rp50 million
Tips to Avoid the Online Loan Trap
To avoid getting caught in default problems, here are some practical tips:
- Choose Legal Online Lenders: Make sure to only borrow from official online loan applications registered with the OJK. A list of legal online lenders can be checked on the official OJK website.
- Borrow According to Your Needs: Use the loan for urgent needs, not just for lifestyle consumption.
- Calculate Your Ability to Pay: Make sure the installment does not exceed 30% of your monthly income.
- Maintain Your Financial Reputation: Paying on time will keep your BI Checking history in good standing.
Glossary of Important Terms
- Pinjol: Online loan
- Gagal bayar: Loan default
- BI Checking: Credit history check by Bank Indonesia
- Blacklist: Being flagged as a bad credit debtor
- Bunga: Interest
- Denda: Late fee / penalty
- OJK: Financial Services Authority of Indonesia
- SLIK: Financial Information Services System (by OJK)
- TWP90: The 90-day default rate, measured as failure to pay for more than 90 days.
What Can We Learn?
The phenomenon of online loan default is a reflection of economic challenges in Indonesia, but also a learning opportunity about financial discipline and literacy. The impact is not only financial but also social and emotional for the community. Online loans are not a bad thing if used wisely and through legal platforms. The key is financial education and understanding the long-term consequences of every financial decision.
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