It’s no secret that trends are changing at every turn in the 21st century, but what about changes in the credit services industry? What does the data show – what has changed in supply but what in demand? Are fast one-year loans and 24-month loans really the most common types of credit reported in the media? We at Mother Berry offer you an insight into the latest trends in credit services. Read the article and find out!
The process of obtaining credit
For example, for a one-year loan or a 24-month loan, there are 7 steps to take, and this type of loan will work for all types of loans, both in Latvia and worldwide.
Trends show an increasing number of credit institutions in recent years, with both:
- fast loans up to 12 months;
- credit for 24 months;
- loans with a longer repayment term – up to 30 years.
This indicates the expansion of the credit sector. But why?
As demand increases, so does supply
What indicates that demand is high? A study by the Latvian Alternative Financial Services Association conducted in collaboration with the research center “SKDS” indicates that:
- by 2017, more than 190 thousand Latvian residents are using credit services, and this number is increasing day by day;
- The majority of borrowers – 82% – consider the lending industry to be positive, thus not concealing that they will turn to the lender again to obtain a loan if necessary.
There are currently more than 50 non-bank lenders in Latvia, as well as 23 banking lenders, 16 of which are banks and 7 are branches of banks in the Member States. Read on to find out what types of loans are most often chosen by Latvian residents!
At the top of the demand – fast loans up to 12 months
According to the Latvian population survey, comparison of prices of goods and services, found that almost half (46.6%) of those who have ever borrowed money have said yes when choosing a loan for a year or a consumer loan. – direct loans (28.6%).
Why did people decide to borrow?
- To cover incidental expenses. 25.1% of the respondents found that the loan was taken for a year in crisis situations, when there was no excess savings, but money was urgently needed.
- Insufficient monthly income 11.6% of the respondents stated that the fast loans for one year were due to lack of money until the next payday.
- Repairing 8.9% of respondents said that a loan for 24 months was used for home repairs.
Why is a loan for 24 months or a year so demanded?
Fast credit for a year is a relatively handy way to borrow money. It is popular not only in Latvia but worldwide. Why? This has various benefits, such as:
- getting it is relatively faster! It will only take about 10 minutes to settle your loan;
- no pledge or guarantee is required even if the loan is for 24 months;
- the first commission with a 100% commission discount, which means that you must repay as much as you borrow – no more, no less.
We, Mother Berry, are one of the most convenient lenders because we have all the benefits of a quick loan in one place.
How has the situation changed in recent years?
Although the information available in the research shows that credit conditions in Latvia and in Europe have improved significantly in recent years, it is concluded that Latvia is lagging behind the overall European level. Development was facilitated by easing credit standards for companies.
What changes did Latvian bank and non-bank sector lenders experience in 2016? Read on and find out!
Banking sector in figures
The data compiled by the FCMC for 2016 indicate that the banking sector was operating with a plus sign because:
- a profit of USD 453.7 million, an increase of 9.1% on 2015, which is above the European Union average;
- USD 1.7 billion in new loans (non-financial corporations) and USD 710 million (households), an increase of 35% on average over last year.
Non-banking sector in numbers
The non-bank sector also performed better in 2016, according to the Consumer Protection Center’s review of the functioning of the non-bank consumer lending market in 2016, as evidenced by the fact that:
- was the most successful of the last 5 years in the field of new loans. The amount of new loans was USD 538.46 million, which is 15.05% more than in 2015;
- By fostering competition with each other, non-bank lenders are increasingly offering new products and various benefits that allow them to attract customers in the long term.
The changes have affected not only the creditors of the banking and non-banking sectors, but also the borrowers.
Borrowers have become more cautious
Studies in recent years show that borrowers have become more cautious about loans by focusing on credit:
- fitness. When shopping, you do not buy the first item you see on the shelf, but look at the range available and then choose. Loans are the same – they are of different types, so all options are considered before borrowing money. Often, several days or even weeks are spent exploring the range of offerings;
- repayment rate. You don’t want to overpay, do you? Other borrowers are also paying increasing attention to the interest rate in order to get the best possible repayment;
- necessity. Maybe the situation is not so urgent and you can do it until your next payday? Therefore, the need for additional spending should be carefully considered before borrowing.
Although the latest trends show that fast one-year and 24-month loans are increasingly in demand in Latvia and abroad, we, Mother Berry, the responsible lender, are calling for you to be responsible too. Before making a loan, assess whether your current financial situation is sound enough to return the money to the lender in due time!