According to the Consumer Rights Protection Center (CRPC) data, quick payday loans remains stable demand Latvian population. Borrowers choose to apply for fast or short term loans for at least two reasons – such loans are relatively quick to obtain and can be useful in a wide variety of unexpected situations. Fast loans are not tied to a specific purchase, so borrowers can use the loan money at their discretion. In this article, we’ll tell you why people choose to borrow until payday, and when fast credit may be worth your attention!
3 Tips for Assessing the Need for a Loan
Quick payday loans are designed for use in unplanned, well-founded situations – if you are interested in short term loans, this phrase is certainly familiar to you. However, general recommendations are difficult to apply in everyday life, when one has to find out relatively quickly whether his or her living conditions fit this characteristic. Here’s how to evaluate different situations and avoid reckless borrowing:
- a loan may be appropriate if your situation worsens without additional money, such as debt, a greater need in the future, health deterioration, etc.;
- a short-term loan can only help if you are 100% sure of your income, because the quick payday loan has to be repaid in full from your next salary;
- borrowing can be considered if the total cost of credit does not exceed 20% – 30% of monthly income.
If, on the other hand, unplanned spending can be quietly canceled or deferred, you may not need fast credit. Read on to find out what purposes short term loans are most often used for!
Overview of fast loans in Latvia
According to the above mentioned CRPC statistics, in 2017 the average amount of one of the new short-term loans issued is 306 USD. This amount is only slightly below the minimum wage and is large enough to also cover the large daily expenses that were not included in the monthly budget.
In Latvia, fast loans are offered by non-bank lenders who do not require you to state the reason for your loan in your loan application. On the one hand, this is convenient because rarely does anyone want to disclose details of their personal lives to a financial institution; However, various surveys show that Latvian residents most often apply for quick payday loans to deal with the following situations:
- unexpected spend. This is the largest sector of borrowing reasons, which includes medical expenses, purchase of new winter shoes, repair of broken pipes, washing machine or computer, etc. In a situation where money is needed immediately and it is not possible to defer payment for a purchase or service, many opt for fast credit;
- Initial budgeted spending that is running out of money at the end of the month. It also happens that quick credit is required for rent, monthly public transport, or even internet or electricity bills. If there has been an unexpected expense in the pocket for a month, you may not have enough money to pay your regular bills;
- large expenses that cannot be covered by savings. Examples of this type of expenditure are airline tickets. It should be noted that fast loans are not used for entertaining, but for urgent travel, such as in the case of a seriously ill relative or other emergency family situation.
We have listed the most common, but not the only, reasons for borrowing. However, regardless of the purpose of using the loan, it is important for every borrower to borrow responsibly. How to do it, follow the story!
Credit repayment – an integral part of successful borrowing
Borrowing in the short term is an urgent financial aid that should only be used when credit is the only option. If you can cover your expenses without applying for a loan, it is advisable to avoid borrowing. Similarly, credit risks can be reduced by partially financing the purchase or service of your savings. In this case, the loan amount decreases and the loan repayment becomes easier.
If you already have loans with other credit institutions, you need to double-check your need for a new loan, as repaying two or more loans is always harder, even for people on high incomes.
To boost borrowers’ financial literacy, non-bank lenders have created a special site where you can learn about responsible borrowing principles – come in and get some helpful tips from credit specialists!
If you’ve evaluated your situation and decided that fast credit won’t be the case this time, use our help in finding the right loan!
All quick credits in one place
We at Sunny More, a credit comparison platform, offer you an insight into the fast credit industry, loan comparisons and informed choices. Finding information about different types of loans on your own can waste valuable time and miss friendly deals that are beyond the first two pages of the seeker. Sunny More has collected the most important information about all non-bank lenders in Latvia and all you have to do is compare and choose!