Past-due loan cases rise by 66 pct in Turkey in one year

Duvar English

The number of individuals falling into legal follow-ups due to failing to pay personal loans or credit card debts on due in Turkey has been increasing exponentially.

Last May, approximately 100,000 individuals were placed under legal follow-ups due to past-due personal loans, which increased to 136,000 people by May 2024, according to the statistics reported by the daily BirGün based on the Banks Association of Turkey’s Risk Center’s report.

The number of individuals under banks’ legal scrutiny due to credit card debts increased by 66 percent in May compared to the same month last year, reaching 125,000 people. 

When individual borrowers of personal loans or credit cards were counted separately, the number of those under banks’ legal follow-ups due to past-due loans in May alone amounted to approximately 238,000 individuals.

The total number of individuals facing legal action due to past-due loans increased by 39 percent from January to May compared to the same period last year, rising from nearly 539,000 people to 750,000 people.

If any debt is not paid within 90 days, it is classified as a past-due loan, and the legal follow-up process begins to collect the debts by putting a lien on property or garnishing wages.

The interest rates on loans and the late payment fees on credit cards surged after the May 2023 elections. The maximum monthly late payment interest rate on credit cards, which was 1.66 percent before the elections, increased to 4.55 percent with subsequent policy rate hikes. During this period, interest rates on personal loans also rose from around 30 percent to 80 percent.

Even though credit utilization decreased with high interest rates, the experts have noted that credit cards replaced the decreasing loans.

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