Most citizens of Latvia have already used consumer loans to finance certain needs in various situations. As the financial offers of banks and credit institutions have widened, so have consumer loans naturally decreased. It is also a widespread thought that consumer loans are one of the least attractive. While there are enough loans to choose from, the consumer loan still stays popular amongst buyers as it has many forms and gives the chance to use it for more than one occasion.
Consumer lending in 2020 / 2021
The financial year of 2020 / 2021 in this sector reports that there has been a downfall of – 16.48% in comparison with the year before. Obviously, the drop is a result of the outbreak of the pandemic, which has let households watch their expenses even closer. Other borrowing ways, such as leasing, have dropped at a similar rate. Indicating that the choice is to save up and buy goods directly, rather than taking a loan. Another report shows that the total loans taken have increased to the previous rates already by spring of 2021. In other words, there has been a downfall in consumer loans for one year.
The consumer loan, in most cases, does not require naming the lender the purpose for it, and most banks do not have clear statistics on them. However, surveys show that it is in a mix of these four most popular grounds:
- For planned larger purposes – often these loans are for various appliances for home, as an alternative for leasing.
- Holidays and other services – this is common for more spontaneous purchases, where the customer can not exactly predict how much they will be spending on holiday or other recreational services.
- Co – financing of housing – the borrower uses the money as the first down payment or during the repayment of the mortgage.
- Unforeseen expenses – paying for medical treatment or other unforeseen reasons.
How consumers choose a loan
The respondents to these surveys also admit that by choosing the loan they rather stay conservative, thus rely on their bank, advertising and word of mouth from family members and friends. Studies also show that respondents rarely compare loans independently. Only the younger generation admitted that they also use a loan comparison site, giving them the freedom to see which offer suits them best, to compare APR (annual percentage rate) and other terms and conditions, preventing them from surprises after the loan has been taken. The APR varies among lenders and can have differences up to 30% – 40% depending on these terms and conditions.
Sortter – loan comparison platform
A new and popular loan comparison site is Sortter. A Finnish company that is operating in Latvia since 2020. It lets us compare loans as easy as we compare flights or hotels. By submitting your requirements for the loan, the comparison site ranks all offers from most operators. You can see which amount suits best and select the lender that has the best option for you. By taking advantage of this privilege, the borrower is always up to date for the right loan at any given time. There is no obligation nor charge for the service and it helps the borrowers to educate themselves before picking the right loan.