THE SOCIO-ECONOMIC IMPACT OF ONLINE LOANS ON LOW-INCOME COMMUNITIES IN MEDAN CITY
DOI:
https://doi.org/10.58432/jx7m2122Keywords:
Online loans, Social impact, Economic impact, Low-income communities, Financial literacy.Abstract
This study aims to analyze the socioeconomic impact of online lending and identify factors that encourage low-income communities to use online loans in Medan City. The study employed a qualitative approach with purposive sampling. Data were collected through in-depth interviews, observations, and documentation of low-income communities using online lending services. Data were then analyzed descriptively through data reduction, data presentation, and conclusion drawing. The results indicate that online loans provide short-term benefits in the form of easy access to funds to meet urgent needs and help overcome limited access to formal financial institutions. However, in the long term, online loans have economic impacts in the form of increased debt burdens, high interest rates and additional fees, and reduced economic capacity. From a social perspective, the use of online loans triggers conflict within families, reduces the quality of social relationships, and causes psychological stress due to aggressive debt collection practices. The main factors driving people to use online loans include urgent economic needs, ease of application, simple requirements, low financial literacy, and environmental and lifestyle influences. It is concluded that although online loans can be a temporary financial solution, their use also has significant socioeconomic impacts, necessitating increased financial literacy and oversight of online loan providers to protect low-income communities.
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Copyright (c) 2026 Desi Putri Diana Ndruru, Evalina Pakpahan, Daniel Ebenezer Silaban, Cindy Yolanda (Author)
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