Juridical Review of Online Loan Practices Compared to Conventional Loan Practices

Oct 13, 2025 by talynt.org 28 views

Juridical Review of Online Loan Practices Compared to Conventional Loan Practices

In today's digital age, online-based financial services, including online loans, have become increasingly popular in Indonesia. The ease of access and fast process are the main attractions, but behind the convenience lies potential risks and legal problems that need to be understood. This study aims to provide a juridical review of online loan practices and compare them with conventional loan practices, with the goal of understanding the provisions of implementation, legal protection, and the mechanism for resolving applicable disputes.

Research Methods

This study employs a normative method by analyzing secondary data, including primary legal materials (laws, government regulations), secondary legal materials (books, journals), and tertiary legal materials (articles, opinions). Data is collected through literature study techniques and normatively analyzed.

Provisions on Online Loan Implementation

Provisions for the implementation of online-based borrowing and borrowing loan agreements are inseparable from the legal requirements of the agreement as stated in Article 1320 of the Civil Code. The legal requirements of the agreement include:

Agree on the Parties: The agreement between lenders and loan recipients must be achieved voluntarily and without coercion.
The Capabilities of the Parties: Both parties must have a legal capacity to make an agreement.
Object of Agreement: The object of the agreement, i.e., loan money, must be something that can be traded and clear.

In its implementation, the parties also adhere to Article 1338 of the Civil Code, which makes the agreement a legal basis for them. In addition, POJK Number 77/POJK.01/2016 concerning Online Loan Services regulates specific provisions related to the implementation of online loans in Indonesia.

Legal Protection for the Parties

Legal protection in online loans includes:

Preventive Protection:

Regulation: The Financial Services Authority (OJK) establishes regulations that aim to protect consumers and prevent illegal and harmful online loan practices.
Transparency: Information related to interest rates, costs, loan periods, and risks must be clearly informed and transparent to the borrower.
Data Verification: Borrowing data must be well verified to avoid fraud and data abuse.

Repressive Protection:

Dispute Resolution: There is a mechanism of dispute resolution through the litigation channel (judiciary) and non-litigation (mediation, arbitration).
Complaints Institution: OJK and Consumer Protection Institute provide a complaint platform for borrowers who experience problems.

Settlement of Online Loan Disputes

When there is a dispute or default in an online borrowing and borrowing agreement, the parties can solve it in two ways:

Litigation: The parties can file a lawsuit to the court to get a binding legal decision. Non-Litigation: Disputes can be resolved by deliberation through mediation or arbitration.

Difference of Online Loan with Conventional Loan

Online loans and conventional loans have some significant differences, especially in terms of:

Accessibility: Online loans are more easily accessible because the process is fast and can be done digitally. Provisions:* Provisions and regulations that apply to online loans are often more loose than conventional loans, giving rise to higher risk potential. Transparency: Transparency of information and costs on online loans is sometimes not as clear as conventional loans. Dispute Resolution Mechanism: Dispute resolution mechanisms in online loans are often more complex and require a deep understanding of law.

Conclusion

Online loans offer ease and speed, but also pose a legal risk that needs to be watched out for. It is essential for borrowers to understand the provisions of agreements, rights and obligations, and dispute resolution mechanisms. Strong legal protection, both preventive and repressive, is needed to ensure online loan practices run fairly and responsibly. Knowledge and caution are the key to benefiting from online loan services without being trapped in legal matters.

Recommendations

Based on the findings of this study, the following recommendations are made:

Regulatory Framework: The government should establish a clear and comprehensive regulatory framework for online loans to ensure that they are fair, transparent, and responsible.
Consumer Education: Borrowers should be educated on the risks and benefits of online loans and the importance of understanding the provisions of agreements, rights and obligations, and dispute resolution mechanisms.
Dispute Resolution Mechanism: A more efficient and effective dispute resolution mechanism should be established to resolve disputes related to online loans.
Transparency and Disclosure: Online loan providers should be required to provide clear and transparent information about interest rates, costs, loan periods, and risks to borrowers.

By implementing these recommendations, online loan practices can be made more responsible and fair, and borrowers can benefit from online loan services without being trapped in legal matters.
Frequently Asked Questions (FAQs) about Online Loan Practices

As online loan practices continue to grow in popularity, many individuals have questions about how they work, what to expect, and how to navigate the process. Below are some frequently asked questions (FAQs) about online loan practices, along with answers to help clarify the process.

Q: What is an online loan?

A: An online loan is a type of loan that is provided through an online platform, rather than through a traditional bank or financial institution. Online loans can be used for a variety of purposes, such as paying off debt, financing a large purchase, or covering unexpected expenses.

Q: How do online loans work?

A: Online loans typically work by allowing borrowers to apply for a loan through an online platform, which is then reviewed and approved by the lender. Once approved, the borrower receives the loan funds, which can be used for a variety of purposes.

Q: What are the benefits of online loans?

A: Online loans offer several benefits, including:

Convenience: Online loans can be applied for and managed entirely online, making it easy to access funds quickly and easily.
Speed: Online loans can be approved and funded quickly, often in a matter of minutes or hours.
Flexibility: Online loans can be used for a variety of purposes, and can be tailored to meet the individual needs of the borrower.
Accessibility: Online loans can be accessed by anyone with an internet connection, making it easier for people to access credit who may not have been able to otherwise.

Q: What are the risks of online loans?

A: Online loans can also come with some risks, including:

High interest rates: Online loans often come with high interest rates, which can make it difficult to pay back the loan.
Fees: Online loans may come with fees, such as origination fees or late payment fees.
Lack of regulation: Online loans are often not regulated as strictly as traditional loans, which can make it difficult to know what to expect.
Risk of scams: Online loans can be a target for scams, so it's essential to do your research and work with a reputable lender.

Q: How do I know if an online loan is right for me?

A: To determine if an online loan is right for you, consider the following:

Do you have a stable income and a good credit score?
Do you have a clear understanding of the loan terms and conditions?
Are you able to afford the monthly payments?
Do you have a plan in place to pay back the loan?

Q: What are the different types of online loans?

A: There are several types of online loans, including:

Personal loans: These loans can be used for a variety of purposes, such as paying off debt or financing a large purchase.
Payday loans: These loans are designed to help borrowers cover unexpected expenses, such as car repairs or medical bills.
Installment loans: These loans allow borrowers to repay the loan in installments over a set period of time.
Line of credit loans: These loans provide borrowers with a revolving line of credit that can be used to borrow and repay funds as needed.

Q: How do I apply for an online loan?

A: To apply for an online loan, follow these steps:

Research and compare different lenders to find the best option for your needs.
Review and understand the loan terms and conditions.
Submit an application through the lender's website or mobile app.
Wait for the lender to review and approve your application.
Once approved, review and sign the loan agreement.

Q: What happens if I default on an online loan?

A: If you default on an online loan, the lender may take several steps to collect the debt, including:

Sending you a notice of default.
Contacting you to discuss payment options.
Reporting the default to credit bureaus.
Taking legal action to collect the debt.

Q: Can I get an online loan with bad credit?

A: Yes, it is possible to get an online loan with bad credit, but it may be more difficult and come with higher interest rates. Some lenders specialize in providing loans to borrowers with bad credit, so it's essential to shop around and compare different options.

Q: How do I protect myself from online loan scams?

A: To protect yourself from online loan scams, follow these tips:

Research and compare different lenders to find the best option for your needs.
Be wary of lenders that promise guaranteed approval or low interest rates.
Never provide sensitive information, such as your social security number or bank account information, to a lender you don't trust.
Read and understand the loan terms and conditions before signing the agreement.

By understanding the benefits and risks of online loans, and taking steps to protect yourself from scams, you can make informed decisions about your financial future.