According to the January 2015 newspaper Diena, a new trend of fast credit is currently on the market. I do not know where new (unlicensed) lenders have come from (actually from the Czech Republic), who issue loans to Latvian residents without taking into account the laws of our country. This is news that is not widely publicized because fast credits are no longer a media bear. These two emerging lenders issue loans from the Czech Republic, although they have had accounts with Latvian banks for at least some time.
What’s wrong with unlicensed lenders?
Both consumers and the state are at a disadvantage: they are vulnerable because they are inherently vulnerable; while the state does not pay taxes on the license (~ 70,000 euros), nor on loans and profits. On the other hand, both lenders not only force users to go through a very slow registration process (so they are also vulnerable), but also offer credit rates that are much higher than with other lenders.
For example, if you borrow EUR 180 (maximum amount) from this Czech creditor for 28 days, you would have to pay EUR 41 for the same loan, whereas, for example, SMSCredit.lv offers the same amount for the same time for EUR 17.28. On average, these foreign lenders are twice as unfavorable, so it is a pity for every client who borrows from them, not only not to support their own, but also to pay taxes to a foreign country.
Opinion of the LNKA: illegal lenders must be combated
In this context, it is also interesting to hear the voice of the Latvian Association of Non-bank Lenders (LNKA): they insist that it is a shadow economy, so illegal lenders must be combated. Mr Fromane refers to the illegal pawn shops still found throughout Riga to illustrate the inaction of public authorities, while also recalling the restrictions imposed by the state on the non-bank lending sector.
To sum up, the article in the daily newspaper Dienas Bizness, entitled “Fast Credit Market Can Get Into the Hands of Illegal Foreigners,” is certainly not false, because anything can happen, but no threat has been raised by such companies so far. Why? Because if someone really borrowed a penny from one of them, then he or she would have wanted to divorce himself by taking such a disadvantageous, awkward and suspicious loan.