Five years ago – in April 2007 – SMS credit service first appeared on the Latvian financial market. It was offered by Scandinavian lending company Good Finance. Latvians liked this service and within a short period of time it became a very popular form of borrowing, with the growing demand for new lending companies and hence competition and better borrowing conditions. It should be noted that the origins of fast credit in Latvia can also be found in GE Money’s “hour loan”, which could be applied in post offices throughout Latvia from 2005 to 2008.
Fast credit lenders
From the outset, so-called “fast credit” lenders have been haunted by unpleasant fame. In order to explain the basis of this fame, we looked at the leading Latvian Internet media 2007-2011. year records that contain the keywords “fast credits” and “fast credits”. A brief look at the results shows that most complaints are about how borrowers are treated by debtors, not the lenders themselves. Lately, the number of complaints about the creditors themselves has fallen, probably because recent changes in the law have squeezed out a large number of smaller lenders, which may well have acted like a racket.
Interestingly, the fast-start lenders, who mostly started out just before the onset of the financial crisis, not only came out of the crisis relatively untouched, but also with considerable income. Such statistics show that SMS credit is a popular solution when there is a shortage of money for some reason, and that even in “good economy” people borrow both before the holidays and during discount periods, thus showing that people are more willing trust fast lenders, not banks, for example.
Standardization in the fast credit business
Recently there has been some sort of stabilization and standardization in the fast credit business, both as a result of legislative changes and as a result of the lenders’ own initiative. In February 2011, the Good Finance Insurance Company (GFIC) was established, which unites ten firms of fast lenders. This organization represents the interests of fast lenders in Latvia, as well as instructs its members to treat clients to certain standards.
The industry was drastically changed by the aforementioned 29 amendments to the law, which require private lenders to purchase a special license for $ 50,000 and an extension of $ 10,000. While these laws encouraged better lender treatment of clients – because the license for injustice can also be withdrawn – in effect, this law meant the end of “small” lender companies, as companies with a narrow clientele did not have the money to buy a license. Currently 41 companies have this license, so it can be said that there are currently 41 fast credit providers in Latvia.
Short-term financial shortages
At the moment, it looks like fast credit will continue to be a popular choice in the event of an emergency before the holidays and short-term financial shortages in general. It seems that the number of borrowers will only increase in the future, both as a result of the increased transparency and affordability of fast loans and the recent, if not changed, rejection of fast loans.