Now 2016 has started and we are all used to writing digital 2016 instead of 2015 in different places, but today I wanted to look more specifically at the fast credit industry and how the new changes and restrictions have affected that industry. In 2015, as most of you know, a bill was passed that imposed various restrictions on fast creditors so that they could no longer abuse Latvian consumers by claiming huge interest rates. And these amendments were set to enter into force on the first of January 2016. But what has really changed, and what do these amendments to the law really mean?
Basically, our government made 5 major changes, which are then designed to provide a better service to consumers and prevent non-bank lenders from charging excessive interest rates. These limitations are as follows:
To a large extent, consumer credit has become even more accessible and more likely to be granted because, although creditors will have to reduce their profits, they will certainly not suffer losses and are likely to continue to grow and develop. But it is likely that these changes to consumer law will be enough to stop the bad press being placed on non-bank lenders and now people, although still paying more than bank loans, will no longer be able to sink into over-indebtedness. It must be said, though, that this kind of government intervention is peculiar to the non-bank creditor sector, and, for example, setting a time for borrowing money and not one of the strangest decisions our government has made.
Of course, it seems out of the box to pass a law that will protect alcoholics and gambling addicts, but don’t we all have the same rights and if I really need the money to call a car tow truck or fuel to get to an accident site? Non-bank loans are likely to be issued in exactly the same amount as they were in 2015, and the only thing that will change is that people will be able to borrow more wisely, as the total cash repayment will definitely not exceed these 100%. It is also possible that loans will be issued for longer periods and as of January 1, all non-bank lenders have changed their lending policy and will no longer issue loans for less than 7 or 15 days.