SMS credit for the needy
SMS or fast credit rating has never been unequivocal in Latvia. On the one hand, according to advocates of this type of loan, SMS credit is almost the only way for the needy to get money in case of urgent need. On the other hand, as opponents of short-term loans say, there is a well-founded suspicion that the needy do not take such prudence at all and that these loans only exacerbate poverty. The article will look at different views on fast loans, and try to come to a common denominator.
There are no specific statistics on how much the average fast borrower earns. And yet, it can be judged by other available statistics. (Besides, the average borrower is said to be “a man between 20 and 40 years old with an average salary of 300-400 USD.”).
According to the same study, ‘35% of those surveyed have used quick loans or bank overdrafts in the last year to survive to their next salary, 16% to cover mortgage or leasing payments. 11% borrowed to make big purchases and 10% to pay off debt to relatives or friends ”.
From this data the following can be determined:
a. The credit is really taken by relatively low-income people or people who have a financial stigma.
b. 26% – leasing and debt – fall into the same category, which in principle uses fast credit to cover some financial gap.
c. 11% use quick credit instead of leasing, which, at least for the first time, is prudent because it does not have to pay interest on the loan.
Thus, when making ends meet, users of fast credit tend to use it to cover short-term cash shortages (35% + 16%) or to cover debt (11%) apparently due to such financial shortfalls.
What do others think about SMS credit?
SMS credit is viewed by both financiers and journalists as a negative phenomenon, arguing that it drives people into debt. Since fast credit is the most popular among people in the 20-40 age group, we can also say that older people don’t think good about SMS credit, but just as well, they say that they deal less with it because it is mostly advertised on the Internet.
The Latvian media occasionally has mixed views on fast loans, but the interview with research journalist Mr. Hammyn, who says not so flatteringly about fast loans, “Micro loans,” seems the most appropriate for the article.
While more specific information is needed about fast loans and who uses them, more data is needed, but something can be said. The Latvian Fast Credit Association reports that debtors have only 15% of SMS borrowers, but the consequences of fast credit on these 15% of their lives are certainly negative, and thus negative for society.