is one of the largest Japan

Japan

Japan is an island nation in East Asia. Located in the Pacific Ocean, it lies to the east of the Sea of Japan, China, North Korea, South Korea and Russia, stretching from the Sea of Okhotsk in the north to the East China Sea and Taiwan in the south...

ese consumer finance

Consumer finance

Alternative financial services in the United States refers to a particular type of financial service, namely sub-prime lending by non-bank financial institutions. This branch of the financial services industry is more extensive in the United States than in some other countries, because the major...

 companies. Currently the company is based in Kyoto

Kyoto

is a city in the central part of the island of Honshū, Japan. It has a population close to 1.5 million. Formerly the imperial capital of Japan, it is now the capital of Kyoto Prefecture, as well as a major part of the Osaka-Kobe-Kyoto metropolitan area.-History:...

 and has annual profits of close to ¥100 billion on over ¥2 trillion worth of loans. [This article is out-dated and inaccurate. The company had to restructure its debt after failing to make a loan payment.

History

Aiful was established in April, 1967 by Yoshitaka Fukuda as a sole-proprietorship. In 1978, this small company was reformed in Kyoto as Marutaka, Inc. and opened its first four branches to expand its consumer-finance business. The company continued to grow over the next five years and it acquired three small companies in the same business segment and renamed itself Aiful in 1983. These mergers gave the company over ¥90 million in capital and a growing market share in the consumer loan sector. Soon afterward, the company began to offer home-equity and small business loans. During the 1980s and up to the present day, the company has continued to expand by finding new investment opportunities, particularly real estate, engaging in mergers to increase its market share.

Today the company offers a wide range of consumer financial services, ranging from issuing credit cards to providing home equity loans. Additionally, the company provides small business loans and until recently operated a chain of karaoke

Karaoke

is a form of interactive entertainment or video game in which amateur singers sing along with recorded music using a microphone and public address system. The music is typically a well-known pop song minus the lead vocal. Lyrics are usually displayed on a video screen, along with a moving symbol,...

 parlors and Taiwanese-style restaurants. The company has 1,572 branches (many of them automated teller machine

Automated teller machine

An automated teller machine or automatic teller machine, also known as a Cashpoint , cash machine or sometimes a hole in the wall in British English, is a computerised telecommunications device that provides the clients of a financial institution with access to financial transactions in a public...

s) throughout Japan and currently employs over 3000 people.

Criticism

The company has many techniques to promote repayment that some have viewed as unscrupulous, but have resulted in a low default rate for the bank. Additionally, the company has been charged by some individuals with exploiting the financial problems of some consumers by offering high-rate loans that must be secured by collateral, often the individual's real estate. This may lead to loss of consumer's homes and has led to allegations that the company is a sarakin

Sarakin

is a Japanese term for a legal moneylender who makes unsecured loans at high interest. It is a contraction of the Japanese words for salaryman and loan...

or a loan shark

Loan shark

A loan shark is a person or body that offers unsecured loans at illegally high interest rates to individuals, often enforcing repayment by blackmail or threats of violence....

. Several advocacy groups have been formed for those who feel victimized by such practices.

In 2006 regulators in Japan ruled against the lending practices of the consumer finance sector and revised the maximum legal lending rate to 18.75% (down from a previous legal limit of 29%). Furthermore this ruling enabled consumers to claim back the interest they have been overcharged from companies like Aiful for a period of up to 10 years back

Ex post facto law

An ex post facto law or retroactive law is a law that retroactively changes the legal consequences of actions committed or relationships that existed prior to the enactment of the law...

, which forces them to make high provisions for these reimbursements on their balancesheet.
On April 14, 2006 the FSA issued a business suspension order that forced Aiful to shut down domestic operations for 3 business days and in some areas up to 25 days.

Advertising

In contrast with the more staid image of the more traditional banks, Aiful and other consumer finance companies attempt to have a livelier image. For example, the signs and logos of Aiful and its subsidiaries are often very colorful and eye-catching, seeking to draw passersby into loan outlets. Recent advertisement campaigns have featured Chihuahua TV ads and special loans marketed towards women. Additionally, Aiful and other consumer finance companies often distribute packages of tissues at mass transit stations.

External links

• Aiful Corp. (in Japanese)
• Aiful Corp. IR info (in English)
• Consumer loans for women