Eesti Pank statistics put it plain: average credit costs of consumer loans in Estonia is 21.65 percent. The figure includes all credit agencies from large banks to fast loan peddlers.
At that, the credit market has been freshly entered by two of the three mobile telecommunication operators: Telia and Tele2 have announced determination to seize a share of the financing market – and that by mobile payments where sum for goods and services purchased over a month is added to the invoice.
Tele2 has the service operating already with €200 set as monthly limit. They have not fixed an interest but on every transaction one pays them 32 cents as fee.
Earlier already, they needed the licence to offer devices to client from web store at deferred payments; that, in turn, is made up of contractual fee, instalments, and the interest added. Turns out the service is above average expensive.
In fine print by clearly, Telia has specified its leasing terms. Its credit cost rate stands at 26.5 percent a year i.e. easily above the credit market average.
If one wishes to get a €500 phone by paying instalments, the contractual feel is €15.9. On top of this, 21.9 percent is paid monthly on what remains to be paid of the loan. With a 48 months loan, this makes a whopping €263.14 in interests – a middle price range phone. Thus, for the €500 phone one ends up paying €779.04.
«People’s preferences and options when acquiring products vary and a client will take the decision to buy as he assesses his financial abilities. Definitely, leasing comes with the benefit of distributing the payment over a longer period of time,» commented Telia press rep Raigo Neudorf.
He said it was rather usual, also, for people to get a service with the new product. «For instance, whoever joins Telia’s Mobiilne elu will get the bonus of free Spotify Premium and MINU.TV use for three months,» he noted while proceeding to point out alternative options added as Alati Uus and Vana Uueks.
Tele2 has decided not to apply instalment interest with contracts beyond 24 months. This means that 90 percent of their leasing is interest free. With shorter contracts as leasing of 6, 12 or 18 months, however, interest is added. In that case, the credit cost rate with telephones is also above the average i.e. 25.6 percent a year.
Thus, when purchasing a €400 phone with 18 months contract, the fee is €15. Fixed interest on monthly loan 17.9 percent adding up to a total of €59. Result: one pays €474 for a phone costing €400.
The only mobile telecommunications operator still without credit licence is Elisa who does, however, offer devices by instalments from web store just like the others while «not asking for interests from client,» said representative Marit Liik. «With Elisa, the sum paid is not different whether one pays at once or by instalments.»
Summing it up: buying a mobile phone by instalments is not like drawing a quick loan – with credit costs potentially mounting to 80 percent – but it sure is dear above average.