Major consumer loan companies will stop issuing loans to housewives and male homemakers without independent income in June as tighter lending rules kick in, sources said.
A law revised to reduce heavily indebted borrowers will oblige consumer lenders to limit loan sizes to a third of a borrower’s annual income.
Since this will also force homemakers to submit more documentation, including consent letters from their income-earning spouses, the lenders have apparently concluded such lending won’t be worth the extra clerical work it generates, the sources said Saturday.
According to a survey by the Japan Financial Services Association, nearly 40 percent of homemakers with consumer loans have not told their spouses about their debts. While the legal revision may succeed in reducing the number of heavily indebted borrowers, it may also crimp lending to housewives seeking minor loans.
Consumer lenders Promise Co., Acom Co. and Aiful Corp. have already cut lending to homemakers, including house husbands who lack their own income. They will stop accepting new applications in June and stop offering additional loans to existing nonearning borrowers, the sources said.
Major lender Takefuji Corp. remains wary of the situation.
‘We’d like to observe discussions by the Financial Services Agency” on steps to ease drastic changes in lending, a company official said.
The new regulations will oblige borrowers to submit documents stating their annual income so the lenders can assess their ability to repay. If the borrower is a homemaker with no income, a letter of consent from the income-earning spouse will have to be submitted along with proof of that person’s income and a certificate of marriage.
“There will be few homemakers who will come to borrow money after obtaining income verification,” a senior official at one major lender said.
Moneylenders will continue lending to homemakers drawing income from part-time jobs, the sources said.