Last year saw the increase of the number of Latvian residents who struggled to pay back their loans and were forced to extend their loan repayment deadlines three or four times, said head of Consumer Rights Protection Centre (PTAC) Baiba Vītoliņa at a press-conference on August 6.
The total debt obligations of Latvia’s residents have been growing at an increasing rate with each passing year, Vitoliņa said, adding that the volume of loans issued by non-bank institutions in 2018 grew by 7.29 percent or EUR 43 million compared to 2017.
The total value of non-bank loans issued in 2018 was 630 million.
The steepest growth was recorded for payday loans (42%), consumer loans (20%) and leasing (30%).
Vitoliņa stated that people most often take loans to cover utilities or outstanding debts (38.89%), the purchase of food and household goods (27.59%), and the repair of transport vehicles (27.3%).
“Taking a loan to pay off a debt is the most unpleasant trend, as this is never the best financial solution,” said Vitoliņa.
A PTAC survey revealed that 77% of people spend more money than they had initially planned on summer vacations, and 34% of respondents admitted of later struggling to cover the expenses, while 11% were forced to borrow money from a lender, relatives or friends to pay off their debts after the vacation.