The amendment of the Consumer Credit Act, regulating the non-bank loan market in detail, came into force on March 11. The major changes are, according to the intention of the legislator, to provide greater security and protection for customers using loan companies’ products, in particular , the so-called payday loans.
Amendments to the Consumer Credit Act to ensure security
The non-bank loan market has gained the approval of customers and has become an alternative to financial products offered by banks and SKOK’i. Data provided by loan institutions associated in the KPF show that the number of borrowers in the last three years has more than doubled.
The development of the non-banking market was undoubtedly influenced by the decision of the Council of Ministers to regulate the activities of loan institutions. These regulations in particular concern entities whose operations do not require the permission of the Polish Financial Supervision Authority.
The aim of the changes introduced in the amendment is to ensure the safety of the clients using the services of non-bank institutions and to eliminate from the market those companies that conduct illegal and dishonest practices towards their clients.
The cost limit reduces the costs of debt service
From the point of view of the client, the most important changes concern the regulation of non-interest expenses. The previous practice guaranteed loan companies full freedom in shaping the cost policy. There were situations in which customers were charged with very large fees, including financial penalties for delayed repayment, so-called debt collection fees or interests on interest. Such freedom meant that additional fees often exceeded several times the amount of the loan granted.
Currently, the amendment introduces new limits on the maximum non-interest cost of consumer loans , which in the case of short-term loans amount to 25% of the total loan amount and 30% of the total loan amount on an annual basis. In addition, all non-interest charges may not exceed 100%. the total amount of the loan. Increasingly, information about the annual percentage rate of interest is also required. This is a kind of loan selection criterion for the borrower .
Loan repayment period and amendment to the Act
Another important regulation concerns the possibility of extending the loan repayment period, an option that was available in almost all loan offers. So far, the customer had the opportunity to extend the repayment period any number of times. It was enough that the customer made the renewal fees within the prescribed period. The new regulations severely limit the possibility of extensions and the amount of fees for them.
Think before completing the loan application
Keep in mind that even the most stringent regulations do not absolve you from making rational decisions . Before each decision on taking out an installment loan or a payday loan , it should be considered whether its repayment will cause serious financial problems. Always compare offers and costs, check the clarity and precision of the contract and adjust the monthly installment to your financial capabilities. Remember that you can apply for a loan tailored to your individual needs, and you can spread the liability up to 30 installments.
Remember that new regulations on the loan market do not absolve you from prudent decisions