Easy Loans Ensnare Japanese Borrowers

The ads show stone statues of Buddhalike gods huddling to gossip about handy credit. On Tokyo street corners, promoters hand out freebie tissue packs with catchy slogans about easy cash.

Such aggressive and ubiquitous advertising is part of a major push by Japanese nonbank financing companies to clean up their image and expand their clientele. Many of these companies, called sarakin, are succeeding, but the easy money they provide has landed some consumers deeply in debt.

A decade or two ago, sarakin were dreaded as shady loan sharks with gangster connections, ready to send hard-up borrowers into “sarakin hell.” These days, the top sarakin companies are housed in shiny skyscrapers in the heart of Tokyo’s business district, rubbing shoulders with major banks.

“It’s become acceptable to have fun now and pay later,” said Noboru Ohsaka, a spokesman for Takefuji, a major sarakin with 2 million clients that recorded 48 billion yen, or $436 million, in profits for the fiscal year ending in March. That’s up 15 percent from the previous year.

By sticking to what it knew best - quick but high-interest loans to regular folks - sarakin survived the recent recession as well as the collapse of the speculative “bubble economy” that sent banks and housing lenders reeling with billions of dollars of debts gone bad.

Still, the sarakin boom has produced its share of losers. Newspaper headlines pop up about borrowers, sometimes entire families, committing suicide over debts.

Individual bankruptcies in Japan total more than 40,000 a year, quadrupled from about 10,000 in 1990, although that’s just a fraction of the U.S. figures.