Financial Services, Latvia, Legislation

On the other hand, taking into account interest penalty, delinquent quick loans make up about 30% of all quick loans, writes LETA.

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 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% of all delinquent borrowers, the second group makes up 8% and the third 2%.

Simanis explains that the loans mostly do not exceed LVL 200, and interest penalty accruals do not exceed the principal loan amount. Most borrowers though do not wait for interest penalty 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.

Simanis also informs that increasingly more members of the association discontinue cooperation with debt collector companies so as to be sure that the debt collection conform to ethical norms and the law is not violated.

Simanis says that quick loans are becoming increasingly popular. According to the association's data, 24% have taken out quick loans at least twice, 13% – three times, and 9% – four or more times.

Simanis expects the portfolio of quick loan provides to continue 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 such companies as Ferratum Latvia, MD investicijas, Atrais kredits, Delta Capital, Pro Invest Group, Dolce Investment Group, ICredit.lv, ARJ Group, Eastcon Finance and Greencredit.