Fast loans and hence non-bank creditors are one of the areas where various changes and modifications are still being made.
For a long time, every lender in the industry was free to operate, and there were no strict restrictions on the control of both lenders and borrowers. Thus, at the very beginning of the first appearance of private creditors in Latvia, many of the residents of Latvia became debtors and were also cheated.
Slowly begin to restructure the non-bank lending sector
In 2010 LNKA or Latvian Association of Non-Bank Lenders was established. Currently it accounts for more than 80% of all non-bank lenders in Latvia, and LNKA also ensures that its members are responsible lenders, as evidenced by the trust mark. This badge of trust ensures that the creditor is a fair conductor and complies with all state and LNKA laws and regulations.
In order for a creditor to operate in this area of credit, it is essential that the creditor also has a license. In order to qualify for the first time, you will have to pay $ 71 140 and you will have to re-register your license each year. The activities of unlicensed creditors in Latvia are illegal and must be reported to the relevant authorities regulating the activities of creditors.
Changes and changes in the law are still ongoing in the fast credit sector
The latest change, effective as of 2016, relates to the penalty interest rate applicable to borrowers who are unable to repay their loans within the time allowed to the creditor. If, until now, each lender had determined the amount of the penalty interest itself, so that the amount to be repaid to the lender could be many times higher than the loan itself, the amendments now adopted will be more beneficial to the borrower. As of January 2016, a borrower who is past due without a grace period will not be entitled to a penalty interest of more than 36%, which is still present on the loan itself. For example, if the loan interest rate is 10%, the borrower will not be charged more than 46% together with the penalty interest.
Without these changes to the law, lenders have for a long time been constrained by restrictions on lending to adults only. In addition, from 2013, LNKA members may only grant cash loans to persons who are at least 20 years old.
The legislation also stipulates that credits shall cease
It is to be issued 24 hours a day. This means that the borrower can obtain the required cash loan only during the working hours of the lender. However, there are currently creditors in Latvia who work from 7:00 to 24:00. Recently, bills to ban fast credit after 10 p.m. 23:00. This means that in Latvia cash loans to non-bank lenders will only be available from 7:00 to 23:00. Such changes have been made to prevent credit being sought when the borrower is under the influence of alcohol or even narcotics. Similarly, loans are often requested only because of running out of money for a night out. Of course, you will still be able to apply for a loan online 24 hours a day.
Although lenders already need to check the borrower’s credit history and income status, some lenders still lend money to untested customers. However, soon, lenders will have to check the income status and credit history of all borrowers, even if the loan amount is up to $ 150. Customers wishing to receive more than $ 500 must also be required to provide a statement from the workplace, SSIA and SRS, as well as a statement of income in recent months.
Recent bills also stipulate that the lenders’ APRC (annual interest rate) ceiling cannot be more than 100% and that the default rate is up to 0.05% per day.