Romania’s Constitutional Court clears bill on capping consumer loans’ cost

Romania’s Constitutional Court on July 11 cleared a bill capping the interest rates, overall cost, and maximum reimbursed sum for consumer loans extended by non-bank financial institutions (IFNs), according to the Association of Financial Services Consumers AURSF.

According to AURSF, after the law is promulgated, no Romanian will be asked to pay an IFN more than twice the value of the loan.

There is also a ceiling on the interest that can be charged to consumers, depending on the type and value of the loan.

The daily cost (effective interest, equal to the interest plus any other fees) is capped at 1% for small loans (up to RON 5,000/EUR 1,000), 0.8% for medium-sized loans (RON 5,000-10,000/ EUR 1,000-2,000) and 0.6% for loans larger than RON10,000 (EUR 2,000).

Separately, the cost of the loan can not exceed the value of the principal. All contracts (signed in the past) breaching the specifications must be revised accordingly, according to the bill.

Also, for the first time, consumers will be able to submit requests for an amicable resolution of the interest reduction request, respectively, of the total cost of the credit through consumer associations.

(Photo: Alekleks/ Dreamstime)