Quick credit beyond the Atlantic
Disagreements on and around fast credit in Latvia seem to be very minor if one looks at the situation in the US. It is estimated that there are more than 22,000 non-bank creditors in the US, approaching McDonald’s and Starbucks eateries. That is, one lender is found in the US for about 13,000 inhabitants. By comparison, in Latvia the figure is around one in 80,000. True, considering only Internet lenders. If we count about 200 pawnshop branches among 25 internet lenders , the picture opens up a terrible picture.
What’s different about US Quick Credit?
In the US, a payday loan is issued against a check signed at a later date and covers all the cost of the loan and the loan itself. This check is a guarantee that the loan will be returned, but if not done in time, the lender will submit the check to the bank. However, lately, a check guarantee is often not required, as lenders often try to circumvent the law by not requiring such a check. The interest rates of these quick loans are approximately the same or higher than in Latvia.
Thus, the US fast credit from the Latvian equivalent differs practically only in that it is secured and in that it is mostly used for drawing up a check. In addition, in some parts of the United States, these credits are either banned or limited to 30-36% per annum.
Why is fast credit in the US a problem?
Fast credit advocates justify the high interest rates on these loans with peculiar arguments. The most common ones are, for example, “is a hotel that costs $ 150 a day also a robber if it costs about $ 54,000 a year?”
Such arguments are weak because they blatantly ignore the fact that fast-lenders in the US are targeting the poor as customers, using their financial stings to make a profit. The relatively poorer Latin American and Black neighborhoods have about 2.5 times fewer fast lenders, reports National People’s Action. Would a person without money use a taxi or hotel? It is unlikely, but anyone who has a bank account can use the quick credit.
The fact that these loans are used by people who cannot afford them is also the biggest problem with fast loans. The United States is in a very peculiar situation where the media and other people through the media are misinformed about the true consequences of fast credit. Adding to the oil fire is the fact that various payday loan companies sponsor congressional election campaigns, while leaving them in debt. It is good to see that the industry in Latvia has been sorted out to some extent by requiring both large equity and start-up licenses for fast credit providers.