According to a survey carried out by Luminor in the Baltic States, Estonians have used consumer loans less frequently within the last two years. Nearly a third of respondents in Latvia and Lithuania have used such opportunity while in Estonia this proportion is only 25%. In Latvia, more often than in other Baltic States, people take loans at the times when there is an unforeseen need for extra funds, majority of such borrowers being young people. In Latvia, loans have been taken at such point by 31% of people, in turn in Lithuania and Estonia – 17% and 16% accordingly.

In Estonia, consumer loans have been used by 25% of the respondents in the last two years while in Latvia and Estonia – by 33% and 34% accordingly. “Most often people turn to consumer loans at times when they need funds for large purchases – this has been the reason for taking a loan for 35% of respondents in Latvia, while in Lithuania and Estonia it has been the case for 43% of respondents. A positive trend is that the least amount of respondents have stated that they would take a loan for entertainment purposes or for everyday expenditures (4-6%), which shows that people are becoming more careful and responsible when it comes to borrowing rather than doing it on a whim,” emphasizes Inguna Krieva, Private person lending expert at Luminor.

But still only a one third of respondents in Latvia compare several offers when choosing consumer credit, in Lithuania it is done more often - 37% of respondents have compared offers, in turn in Estonia – only 28% of respondents have done so. The amount of time it takes to get a loan has affected the choice of young people aged 18 to 29 in Latvia – this has been the determinative factor in the choice of a loan for 30% of respondents in this age group. In turn in the age group from 40-49 years, the decision on the choice of a loan is more often based on previous experience (33%).

Majority of respondents in Latvia and Lithuania who have not taken consumer loan within the last two years have most often pointed out as the reason that such choice has been deliberate because “spending is quick, earning is slow” and they don’t want to take on debt obligations. In turn in Estonia, two thirds of the people who have not used a credit loan point out that there was just no need for extra funds. When looking at reasons why consumer loan might be necessary, the majority state that they would most likely use it to purchase a property or a vehicle, as well as to furnish their homes.

We can see that most of the respondents do not want to take on too big a load in their monthly expenses. About 17% of respondents spend more than one-fifth of their monthly income to repay loans. In Latvia, 53% of the people who currently have a consumer loan use less than 20% of their monthly income for debt repayment, in turn in Lithuania this is the case for 63% of respondents and in Estonia – 66%.

About the Luminor survey:
Luminor survey shows habits of Baltic residents in relation to usage of consumer loans, carried out in cooperation with the market research agency Norstat. Within the study, in total 3026 respondents (in Latvia – 1012; in Lithuania – 1009; in Estonia – 1005) were polled in a representative selection in June 2019.

For more information please contact: Martin Kõrv