Payday Loans Still Popular Among Latvians / Article
Payday loans – short term loans with high interest rates – are still very popular among Latvians. A survey by the Center for Consumer Rights Protection (PTAC) reveals that 10% of Latvians have used these short-term loans more than once in the past three years.
PTAC chief Baiba Vītoliņa said 9% more admitted to using payday loans just once.
Of those who used payday loans, 29% admitted not having read the agreement.
16% said they didn’t know the interest rate before borrowing, while 2% couldn’t say whether they knew it or not. 20% more were not informed of the fines they could face if they did not repay their loans.
Only 65% had no problem repaying the money they had borrowed.
Almost half of those who had problems (49%) extended the repayment date for a fee, 35% made a deal with the lender, 17% cut spending and paid the lender back, while 12% have borrowed from friends or relatives to cover costs. Another 6% said they were looking for “other solutions”.
The survey was conducted through face-to-face interviews in September-October 2015. A total of 1040 people were interviewed.
According to PTAC, the payday lending industry has granted 20% more loans – 223 million euros in total – than a year ago, Latvian radio reported on Thursday.
Some regulations for payday loans – like stricter advertising requirements and tighter criteria for assessing client creditworthiness – are already in place, and more are in the pipeline.
From next year, lenders will have to cooperate more with the State Tax Service, declaring any monthly interest payments above € 360.
In addition, a ceiling of 100% will be introduced on the credit charges, which means that, for example, for a loan of 100 €, the total amount returned cannot exceed 200 € in total.
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