Fast loans back in fashion

  • 2011-08-03
  • From wire reports

RIGA - Fifteen percent of residents who take out the so-called quick loans are delinquent in repaying them, said Latvian Quick Loan Lenders Association head Davis Simanis, reports However, taking into account interest penalties, delinquent quick loans make up about 30 percent of all quick loans.

According to Simanis, delinquent borrowers may be divided into several subgroups. The first group includes those who have temporary problems with loan repayment, and they usually settle their liabilities within three months. The other group includes people who have lost their job or their source of income, and are unable to repay their loans for a lengthy period of time.
The third group includes those who borrow with the purpose of not returning the money, unaware of the consequences this will have. Most people in this group are aged 25 or younger.
The first group accounts for 5 percent of all delinquent borrowers; the second group makes up 8 percent and the third 2 percent.

Simanis explains that the loans mostly do not exceed 200 lats 285.7 euros), and interest penalty accruals do not exceed the principal loan amount. Most borrowers, though, do not wait for interest penalties to reach the maximum, and try to settle their debt within three months. The other debts may take a year or more to recover, says Simanis.
He also says that increasingly more members of the association discontinue cooperation with debt collection companies so as to be sure that the debt collection conforms to ethical norms and the law is not violated.

The Association chief says that quick loans are becoming increasingly popular. According to the association’s data, 24 percent of borrowers have taken out quick loans at least twice; 13 percent three times, and 9 percent four or more times.
Simanis expects the portfolio of quick loans to continue to grow larger because people still encounter problems with short-term money flows and use the services of quick loan providers to solve their financial problems.

The Association of Latvian Quick Loan Lenders includes Ferratum Latvia, MD investicijas, Atrais kredits, Delta Capital, Pro Invest Group, Dolce Investment Group,, ARJ Group, Eastcon Finance and Greencredit.