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Is Consumer lending a profitable business in Spain?

Is Consumer lending a profitable business in Spain so far?
Consumer Court CLAIMS are impacting massively the lending sector. And it’s something that effects consumer lending on its whole, no matter if its online lending, pay day loans or short term or installments, or either the buy now, pay later business, at the end they all end up lending money to consumers based on a credit score rating and expecting a return at the end of the assigned term.
It doesn’t really matter the method lending companies use to lend money, or how predictive the scorecard is, the results for the last year and half have been really awful in terms of defaults.
Why? Let’s do a deep dive on Spain´s macroeconomic reality. Given that the 20% of Spain’s incomes depend on the touristic sector, the impact from pandemic has hit these sector, and the ones linked to face to face services, as a result these has impacted massively alongside the economic stability and increased unemployment to level rates seen at 2008. With that said, why an unclear regulatory path would negatively impact the business?
Collateral triggers on the consumer lending regulatory scope
Provided there is not much clarity on what is considered legal regarding loan prices, this fact triggers collateral issues to the main lending business that makes expensive in terms of legal court procedures costs. That means Consumer Credit Regulation does not establish any cap either for fees, ordinary or default interest rates. That can seem a potential positive fact to set up a lending online company in a sunny country EU country.
But reality is not always as it seems, regardless there is a sort of rates pricing “libertinage”, truth is that jurisprudence has made biding pronunciations towards it,
“November 25, 2015 (RJ 2015/5001, “Supreme Court Judgment No. 628/2015”) declared “the usurious nature of a ‘revolving credit’ granted by a financial institution to a consumer at a remunerative interest rate of the 24.6% APR”
Court decision is referring to a regulated entity, under Bank of Spain Umbrella. Then, can this CAP be considered binding for a no regulated lender? Not from my perspective.
What’s considered
Consumer Court CLAIMS are impacting massively the lending sector. And it’s something that effects consumer lending on its whole, no matter if its online lending, pay day loans or short term or installments, or either the buy now, pay later business, at the end they all end up lending money to consumers based on a credit score rating and expecting a return at the end of the assigned term.
It doesn’t really matter the method lending companies use to lend money, or how predictive the scorecard is, the results for the last year and half have been really awful in terms of defaults.
Why? Let’s do a deep dive on Spain´s macroeconomic reality. Given that the 20% of Spain’s incomes depend on the touristic sector, the impact from pandemic has hit these sector, and the ones linked to face to face services, as a result these has impacted massively alongside the economic stability and increased unemployment to level rates seen at 2008. With that said, why an unclear regulatory path would negatively impact the business?
Collateral triggers on the consumer lending regulatory scope
Provided there is not much clarity on what is considered legal regarding loan prices, this fact triggers collateral issues to the main lending business that makes expensive in terms of legal court procedures costs. That means Consumer Credit Regulation does not establish any cap either for fees, ordinary or default interest rates. That can seem a potential positive fact to set up a lending online company in a sunny country EU country.
But reality is not always as it seems, regardless there is a sort of rates pricing “libertinage”, truth is that jurisprudence has made biding pronunciations towards it,
“November 25, 2015 (RJ 2015/5001, “Supreme Court Judgment No. 628/2015”) declared “the usurious nature of a ‘revolving credit’ granted by a financial institution to a consumer at a remunerative interest rate of the 24.6% APR”
Court decision is referring to a regulated entity, under Bank of Spain Umbrella. Then, can this CAP be considered binding for a no regulated lender? Not from my perspective.
What’s considered…

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