Key facts
- Gig workers in Argentina are increasingly relying on fintech app loans to cover expenses, including recovering impounded vehicles.
- Interest rates on these digital loans regularly exceed triple digits, with some apps charging over 170% annually.
- Argentina's fintech lending sector has seen a 20-fold expansion in the number of individual loans.
- Nearly a third of all borrowers are more than 90 days behind on repayments.
- The ratio of household bad loans reached a record 12.8% in June.
- Calls for government-backed debt relief are growing, though the administration has largely characterized debt as a private matter.
In Argentina, a growing number of gig economy workers and households are turning to fintech apps for loans to manage financial strain exacerbated by rising living costs and President Javier Milei's economic reforms. These digital loans, often offered by the same platforms that employ the workers, come with extremely high annual interest rates, sometimes exceeding 170%. This trend has led to a significant expansion of the fintech lending sector, with the number of individual loans increasing twentyfold. However, a substantial portion of borrowers, nearly a third, are now over 90 days delinquent, pushing the ratio of household bad loans to a record high of 12.8% in June. Analysts note that borrowers accustomed to inflation eroding debt value are now struggling with sharply positive real interest rates. Advocacy groups and unions are calling for government-backed debt relief, but the administration has largely framed the issue as a private matter between lenders and borrowers. The increasing personal indebtedness is seen as a potential political challenge for President Milei, especially as concerns about jobs begin to outweigh inflation in public opinion.
Fintech companies have provided credit to individuals lacking stable incomes or formal employment, a segment often underserved by traditional banks. Both banking groups and fintech firms are advocating for tax reductions on loans to lower borrowing costs. The Argentine banking association, ABAPPRA, has proposed regulatory changes to the central bank to allow lenders more flexibility in classifying borrowers in arrears. The situation highlights how many Argentines are resorting to debt to cover basic needs and everyday expenses, a situation that advocacy groups are actively protesting.