April 15, 2025 | 07:01 pm
TEMPO.CO, Jakarta - As the post-Eid al-Fitr festivities wind down, Indonesians are once again met with the familiar burden of annual bills from online loan platforms and buy now, pay later (BNPL) services.
According to the Financial Services Authority (OJK), this has become an annual pattern. During the 2024 Eid celebration, paylater credit rose by 31.45 percent year-on-year, reaching Rp6.47 trillion.
Similarly, peer-to-peer (P2P) lending saw a 24.16 percent increase. The trend continues in 2025, with paylater financing already climbing 41.9 percent year-on-year to Rp7.12 trillion as of January.
However, this rapid growth brings risks. The non-performing financing (NPF) ratio for paylater jumped from 2.99 percent in December 2024 to 3.37 percent in January 2025.
Even the Chairperson of the Indonesian Joint Funding Fintech Association (AFPI), Entjik S. Djafar, mentioned that many users of these services struggle to pay installments post-Eid al-Fitr due to the spike in consumption during Ramadan and Eid al-Fitr.
"The negative effects will occur after Eid when overdue payments also increase automatically," he told Tempo on Thursday, March 27, 2025.
Avoiding Online Loans and Paylater
Many people now prefer to borrow money through online personal loan applications for the convenience, compared to traditional methods like borrowing from family or neighbors. Unfortunately, this convenience often leads to uncontrolled spending.
Nailul Huda, the Director of Digital Economy from the Center of Economic and Law Studies (Celios), emphasized that people must distinguish between primary needs and consumptive desires.
"The non-performing financing will definitely increase, after Eid the default rate will increase significantly, especially for non-bank pay later," Huda said.
He advised people to start limiting non-priority consumption and ensure that the loans taken are within their repayment capability.
AFPI itself recommends that service providers tighten the assessment of borrower eligibility using machine learning technology, so that only users with low-risk profiles can access loans. This is important to prevent the burden of defaults from continuously increasing each year.
The high demand for loans before Eid, followed by a surge in defaults afterwards, not only impacts individuals. Heru Sutadi, the Executive Director of the ICT Institute, mentioned that this phenomenon could become a "default credit tsunami" if not properly anticipated.
According to Heru, the high rate of layoffs also contributes to this risk. Throughout 2024, 77,965 people were recorded to have been laid off, a 20 percent increase compared to 2023.
“These services are increasingly popular in difficult economic conditions, especially when many people experience layoffs,” he said.
This puts additional pressure on household finances, leaving many unable to afford even basic necessities, let alone repay loans, after Eid.
The OJK acknowledges the digital lending boom as a sign of significant market potential, but stresses the need for strict oversight to ensure the industry remains healthy. Without it, rising post-Eid NPF rates could become a long-term drag on both consumers and the broader financial system.
Riani Sanusi Putri and Ervana Trikarinaputri also contributed to the writing of this article.
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