As you know, payday loans are the most sought-after service in the microfinance market. Year after year, the number of such small payday loans grew steadily. But, according to the results of the third quarter of this year, the number of issued short-term payday loans, for the first time in history, began to decline.
Payday Loans to paychecks
Loans to paychecks are not so expensive because the loan amounts are not large and they are issued for short periods. But, in terms of the generally accepted annual service, the percentage of them can reach 600%.
However, this product has always been in great demand. Largely due to the fact that people who already have loans on their hands (and there are more than half of the country’s population), often could not get a bank loan or a long loan for several months.
Payday loans decreased in number
The reduction in the number of short-term payday loans was influenced by new amendments in the law because of which one citizen can take a small payday loan or extend it a certain number of times.
Restrictions touched, just the same, namely loans to paychecks. So, as people at some point could not roll over another loan, this began to lead to an increase in the number of delinquencies.
According to the July innovations
One person can apply for a maximum of 10 loans per microfinance organization per year, and extend the agreement a maximum of 7 times.
For MFIs, this situation has turned into some kind of pros and cons. On the one hand, there are delays and some of the money is not returned to the company. On the other hand, many customers are beginning to use other financial products – longer loans for large amounts.