Ar mažųjų (greitųjų) vartojimo kreditų draudimas neprieštarautų LR Konstitucijos 46 str.? ; Would not the prohibition of consumer payday loans (fast credits) violate art. 46 of the Constitution of the Republic of Lithuania?

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Abstract

This study examines how consumers would be influenced, if payday loans be prohibited. To reach the goal, normative evaluative, descriptive explanatory, comparative analysis methods were applied. Below it is presented the results of the study. Changing needs of the country's economy accordingly lead to the change of people's need to adapt to natural changes in society. As these needs grow, some people (usually, more socially vulnerable persons) often experience shortage of additional income. Additional income is often necessary to meet the minimum needs of the individual: food, treatment or extra events, such as car repairs, etc. Usually, this group of people has no alternatives of borrowing, because fail to meet the applicable requirements for income. In such case, these persons obtain additional income through consumer payday loans. However, the society seeks to form the view that this type of credits is harmful to society, since it is considered to be a "costly" borrowing product that gives rise to a "vicious circle of borrowing", when the consumer is forced to pay the cost of credit extension (which further increases the cost of the credit) due to shortage of income to repay full amount of the credit. For this reason, the state started regulating procedures for granting consumer payday loans (fast credits). The main reason why Lithuanian legislators adopted such strict regulation of the market is the inability of consumers to manage their finances. However, such restrictions do not solve the problem; on the contrary, all the negative effects of regulation are placed exclusively on the consumer obtaining the credit. Attention should be drawn to the fact that before taking these drastic measures, no research was performed as to assessing their impact on the interests of consumers and Lithuanian credit market. However, this thesis aims at determining whether the prohibition of small consumer credits or very strict regulation of loan granting would have negative or positive effects. In this case, preventing individuals from legally obtaining income for the purposes of meeting their material needs violates Article 46 of the Constitution of the Republic of Lithuania. Regardless of this fact, borrowing is both moral and statutory right of a person. When managing their income, individuals exercise and ensure their rights, such as right to nutrition, education, health care, etc. Thus, the right to availability of credit can be directly related to ensuring these rights of individuals. Furthermore, it supports the right provided for in Article 23 of the Constitution, i.e. unrestricted disposal of property, because borrowing is also type of disposing of one's property. The thesis failed to demonstrate that prohibition of consumer payday loans (fast credits) would ensure more positive than negative consequences. There is also no evidence that granting consumer payday loans (fast credits) in the current Lithuanian market is harmful. Therefore, prohibition of consumer payday loans (fast credits) would violate Article 46 of the Constitution of the Republic of Lithuania.