Payday advances in Lithuania are included in the short-term loan or called quick loans industry. Lietuvos Banks Eurosistema or Bank of Lithuania – Lithuanian Republic Central Bank regulates the pay day loans industry.

Below are a few summary points through the industry overview, that are later on explained much more information:

  • The quantity of pay day loans provided reduced by half – to €65 million, its cheapest value since 2013. Right from the start, it absolutely was growing by a lot more than 80 percent last year and 32 percent in 2012.
  • The typical interest that is annual on pay day loans followed a downward trajectory, decreasing from 72% to 42per cent within the year.
  • The quantity of payday advances increased by 11.1percent.

Lithuanian Pay Day Loan Business and General Market Trends

Based on Lietuvos Banks Eurosistema news, by the end, the very first signs and symptoms of modification had been present in the cash advance market. Gradually, the marketplace is now more sustainable, and, consequently, more accountable. Through the last quarter for the past 12 months, the total amount of loans given by credit rating organizations to brand new credit customers fallen by a tenth. Re re Payments overdue expanded at a slow speed.

Lietuvos Banks Eurosistema published two overviews concerning the alterations in cash advance market. The past a person is when it comes to very first half, while the other a person is in review. Below we present the 2 magazines.

In line with the article en titled “Changes in pay day loan market – more lending that is responsible less indebted” in the 1st half-year of 2016, the quantity of pay day loans in Lithuania reduced by two-thirds, 12 months on 12 months. Credit lenders assessed customer solvency more responsibly. When it comes to very first time in history, overdue loans low in quantity.

The Chairman regarding the Board of this Bank in Lithuania said that three facets contributed to those styles;

  1. The active direction
  2. Stricter needs associated with the Law on Consumer Credits that arrived into force at the start of the entire year
  3. Competition forced credit loan providers to basically alter their approach and evaluate customer solvency more cautiously.

Many of these changes assist to avoid the loan that is overdue burden and reduces the risk associated with serious social repercussions that follow.

The total amount of payday advances issued reduced by half – to €65 million, its value that is lowest since 2013. In the 1st half-year of 2016, the general number of new payday advances given, when compared to half-year that is previous paid down by 68.7% to 130, 000.

The amount of approved applications reduced to 26% in the first half of 2015, approximately 40% of applicants were granted a payday loan; year on year. In mid-2015, young individuals taken into account more or less 30% of total clients of pay day loan organizations. Given that figure has declined by almost a quarter to 23per cent.

Additionally, the typical yearly interest rate on payday advances in Lithuania used a downward course, decreasing from 72% to 42per cent within the 12 months. The tiny credit prices amounted to very nearly 100% a year ago. This season the typical yearly rate of interest on tiny customer credits have now been fluctuating around 65%, dropping in short supply of the 75% interest limit laid straight straight down through laws.

The share of funds lent by peer-to-peer financing platforms, when compared to that by cash advance organizations, continues to be little, despite the fact that pronounced development is recorded. On the half-year, right from the start of 2016 to July 1, the mortgage profile of those platforms doubled – from €2.3 to 4.6 million. It taken into account almost 2% of this loan that is entire of cash advance businesses and peer-to-peer financing platforms, which amounts to around €225 million. In mid-2016 there have been very nearly 4000 customers utilizing peer-to-peer financing platforms, and very nearly 380,000 clients of cash advance businesses.

Based on the other publication news “First signs and symptoms of improvement in pay day loan market” within the quarter that is fourth of, the actual quantity of brand new customer credits provided reduced by 10per cent – to €65 million, although the wide range of brand brand new customer credits issued reduced by 11per cent – to 195,000.

Till 31 December 2015 clients are provided 562,000 consumer that is payday – 11.1% a lot more than at the conclusion of 2014. The mortgage stability had been €251 million – it increased by 30.2per cent. Nonetheless, how many delinquent loans, when compared to the consumer that is overall profile, increased from 33per cent at the conclusion of 2014 to 36per cent at the conclusion of 2015.

12 months on 12 months, the quantity of credits overdue for 30 – ninety days paid off by a lot more than a 3rd or 34.9%, ultimately causing a first-time-ever yearly contraction in the quantity of overdue loans.

We’ll now present more statistics that are interesting the analysis of this Payday Loan Borrowers in Lithuania which I will be elaborate more in costumer traits. The lending that is payday grew tremendously fast from the start. The analysis of this top 3 payday lenders (whom represent 80% of this market) indicates that starting from almost nothing, they will have reached a lot more than 100 million LTL (almost €29,180,000) of great interest income in 2012. The portfolio that is overall by a lot more than 80 percent and 32 per cent .

Comparing to your main-stream financing, they are reasonably numbers that are small. Nonetheless, such earnings happens to be compounded through the loans, the typical number of which is was roughly 386 LTL (€113), with APR of 100per cent. There has been nearly 800.000 company website credit agreements made per in 2012 and 2013 year. Which makes very nearly 34 credit deals for each 100 individuals of appropriate age (18 and more) in Lithuania.

Based on an analysis for the specificities of pay check loan provider items and industry, in Lithuania, 39% of most borrowers that are payday underneath the chronilogical age of 25. The figure that is first of over is available become because high as 37%.