Tokyo, Oct. 13 (Jiji Press)–A growing number of people in Japan are carrying debts from multiple lenders, including consumer finance companies. According to Japan Credit Information Reference Center Corp., which manages individuals’ credit information, 1.55 million people had three or more unsecured, unguaranteed loans from moneylenders at the end of fiscal 2025, which closed in March this year. It was the highest level in 12 years. Rising prices may be pushing more people to borrow money to cover their living expenses. Making Ends Meet Starting in the 1990s, excessive lending by consumer finance companies led to a wave of personal bankruptcies, while aggressive debt collection became a social problem. In response, a revised moneylending business law was enacted in December 2006, tightening regulations on consumer finance companies and other lenders. The revised law took full effect in June 2010. It capped each borrower’s total loans at one-third of their annual income. As a result, the number of people owing money to multiple lenders fell steadily, from levels around four million to 1.14 million at the end of fiscal 2020. Since then, however, the number has been rising gradually. The increase has been especially sharp among people with five or more loan contracts. Their number climbed to 150,000 at the end of fiscal 2025 from 90,000 five years earlier. As of July this year, the average outstanding loan balance per borrower in this group was 1,447,000 yen, nearly 100,000 yen higher than three years earlier. Rising prices, which are squeezing household budgets, are likely a key factor. “Wage growth has not kept pace with prices, and people without savings are borrowing to cover the shortfall,” said Yuki Fukumoto, head of financial research at NLI Research Institute. In a survey of moneylending service users commissioned by the Financial Services Agency and released in July this year, 53.7 pct of borrowers from consumer finance companies said they borrowed to pay living expenses, making it the most common reason. Online Contracts Lower Barriers In recent years, consumer finance companies have been shifting toward online contracts. Major lender Aiful Corp. closed all of its unstaffed branches by the end of July this year, and industry competitor SMBC Consumer Finance Co., which offers loans under the Promise brand, did the same in September. Newer players such as Mercari Inc. and Line Credit Corp. also offer personal loans online. Consumers can now borrow easily via a smartphone without the trouble of visiting a branch. The Japan Credit Counseling Organization received 5,646 phone calls seeking advice on debt in fiscal 2025, up 14.4 pct from the previous year. In August this year alone, the number topped 600, according to the group, which suggests that the number of people struggling with debt is still rising. “In addition to people having trouble making ends meet, we get many inquiries about debts from gambling or impulsive in-game purchases in online games,” an official of the organization said. Hiroshi Domoto, a professor at Tokyo University of Information Sciences who knows the lending industry well, warned of a further risk. “People with low creditworthiness may become unable to borrow from legitimate, registered lenders and could turn to illegal loan sharks,” he said. New forms of illegal lending have also appeared, including so-called person-to-person lending, in which borrowers are recruited through social media. These schemes have frequently led to disputes. “Both the industry and the government need to strengthen their counseling services” to keep people from taking on more debt than they can repay, Domoto said. END [Copyright The Jiji Press, Ltd.]
