Show that the fast loan companies withdrew interest income of as much as USD 90 million in a single quarter, which in one year will be USD 360 million. This tells us two things: 1) that sms, or fast loans, are Good Business and 2) that people who have taken sms will make 120 million in interest deductions in total before the end of the year.
It is true that you can set off 30% of your interest expenses against paid tax and 30% of USD 360,000 is USD 120 million. This means that the state can repay a total of USD 120 million to those who have taken sms loans, which we like but probably not the state.
The interest deductions for mortgage loans are the worst
Well, the interest deduction for sms loans is probably not a major problem in this context, since the Swedes have so far this year reported interest costs for as much as USD 95 billion, which means that the state loses about USD 28 billion in tax. The biggest culprit in the drama, of course, is the large mortgage loans that are constantly increasing in size because mortgage rates are low and housing prices are high.
Don’t forget the interest deduction when looking at sms loans
Yes, you can thus deduct your interest expenses even when you take out sms loans and it should be kept in mind when looking at the total loan cost when borrowing money. In the short term, of course, you have to pay back the interest cost that the sms loan has, but in the slightly longer term the cost is actually lower than that since the interest rate for sms loans is deductible.
Snabblan24.nu should give you an example that shows how it works:
- Suppose you take a sms loan at Onea of USD 3000 for 1 month, then you get USD 300 in interest costs, ie 10% of what you borrowed. Of course, you have to pay this within 1 month.
- In the declaration you state that you have had an interest cost of USD 300, although most often this information is already the declaration because it is usually reported by the credit company you borrowed money from.
- You may deduct 30% of your interest expenses of USD 300, which will be USD 90. This means that USD 90 of what you earn is tax-free money because of this sms loan, money that you would otherwise have taxed.
One thing to keep in mind when it comes to deductible interest rates on sms loans is that you obviously have to have an income or a return on capital in order to qualify for the interest deduction, but on the other hand you probably don’t even get a sms loan if you don’t have any income at all.
USD 1 billion in quick loans
Before the end of the year, people are expected to have taken out fast loans for at least USD 1 billion in 2015, but how many loans are they really about? This has not been able to get any figures on Snabblan24.nu yet, but it would be about 300,000 fast loans if the average loan were at USD 5000. With us, most loans take a few thousand dollars, but every now and then it is about bigger loans, so USD 5000 may not be a completely unreasonable figure.
Unfortunately, the crown bailiff received 60,000 cases due to fast loans in 2014 and if people took maybe 300,000 loans in the same year, this means that every fifth customer who takes a sms loan ends up with the bailiff, but probably our figure of 300,000 fast loans is understated. In any case, you should not become one of those who end up with the crown bailiff, not if you carefully read our article on what to think about before taking a quick loan.