The online consumer lending market worldwide is represented by two main areas:
- payday loans (instant loans, fast and most convenient for customers);
- installment loans (short-term loans up to a year with partial repayment).
Right now, the payday&installment lending market is still undergoing formation, as evidenced by the appearance of major players every year.
The lowest ratio of the amount of short term lending to GDP per capita is in Germany (6%), France (11%), Switzerland (12%) and the UK (16%), more than 100% of this figure in Hungary and Poland. The microcredit market in Poland is currently one of the most developed in the world, along with the UK and US markets. More than 60 micro-credit companies are represented in Poland, including the world’s largest financial corporations.
About 350,000 small loans are issued in the USA every day. The market also provides informative resources describing the financial scenario in every state such as payday loans in North Carolina.
At the same time, the maximum interest rates in the United States can reach 3% per day. In 2004, there were more branches of microfinance companies located in California than McDonald’s and Burger King restaurants. The average size of a microfinance loan in the United States is $9,732, which is ten times the average size of a microfinance loan in developing countries ($973).
But one day the payday lending market face the problem of small towns where there are no offices, for example. For this purpose, there were also created online lending helping to get this service exceptionally online. As a result, you may get acquainted with payday loan Charlotte or payday loans Raleigh and decide what options: online or offline are available in your location.
In most countries of Europe and the USA, the services of microcredit organizations can be used by persons over the age of 18/21. Payday loans are most actively taken out before holidays and vacations, and the decline is usually noted in the summer months.
The purpose of MFOs in Europe and the USA: financing small businesses and personal needs of citizens
Americans take out short-term loans to earn. Loans for small businesses allow owners to manage operational activities more efficiently without interrupting production processes. At the same time, 67% of borrowers demonstrate a significant increase in their income as a result of “temporary insurance” of the business.
In Europe, most payday lending companies offer only business payday loans, 1/3 provide financing for business and personal small loans, and very few MFOs offer exclusively personal short-term loans. Despite the fact that personal micro loans are showing noticeable growth, most of the portfolio (71%) is allocated for business quick loans. The financial support of the European Union is focused on MFIs that finance loans in order to generate income, and not the personal needs of clients.
The terms of microcredits vary greatly among European countries. The average annual interest rate on business micro-loans varies from 3% in Poland and Finland, and 28% can reach in France and Serbia. As for personal small lending options, the interest rate on this type of loan can vary from 4% (in Italy and France), and up to 41% (in the UK). The difference lies in different legislation programs and the degree of state regulation of the terms for issuing a payday loan.