CRPC: Citizens tend to spend more than they earn, need to promote financial literacy

The Consumer Rights Protection Center, in co-operation with the Faculty of Business, Management and Economics of the University of Latvia, conducted a study to clarify the reasons, conditions, situations and sales practices that encourage Latvian residents to use remote or payday loans, explore the experience of consumers in the borrowing process and repaying loans.
The payday loan industry in the world has developed rapidly over the past 20 years, leading to a series of questions about the sustainability and impact of the business model of this industry on population's consumption, as well habits and well-being. A series of serious studies and publications assess the benefits of payday loans and the well-being of low-income citizens, claiming that payday loans are not helping with paying bills, but on the contrary, increasing the prospect of getting into even bigger debts. Studies have been carried out that indicate the impact of payday loans on population consumption and financial independence. For example, there may be talk about chronic borrowers who have gotten into debt addiction and cannot get out of it with their own forces. Individual studies also point to the payday loan traps that draw borrowers into a continuous borrowing wheel. 
The results of this study lead to the assessment of the liability of the payday loan companies the extent, to which the solvency of borrowers is assessed. The examples and situations dealt with are once again raising the question of the degree of regulation of the payday loan industry and whether consumer education level and financial literacy are at a sufficient level to be able to defend their interests.

Study: The Use of Distance or Payday Loans in Latvia

 

Additional information:
Sanita Gertmane,
Consumer information and Communications Division
sanita.gertmane@ptac.gov.lv 
67388622, 26544528