The Government puts a limit on the interest on consumer loans with new regulations
The Government lays the first stone to stop the interest on consumer credit, known in the jargon as ‘quick loans’. The Minister of Economy, Commerce and Business, Carlos Body, has announced the draft consumer credit law to transpose two European directives that will limit the costs associated with this type of financing. In the press conference after the Council of Ministers, Corps has specified that said regulations will go to public hearing and will include two different types. On the one hand, the general microcredit regime, for which it will be set at 22% temporarily; while for the second case, the monthly interest will be 4%.
As an example, the head of Economy has detailed that a loan of 300 euros for 30 days has an average cost of 103 euros. With the new regulation this cost will be reduced to 40 euros. Among the novelties of this new regulation, which seeks to “protect consumers and avoid over-indebtedness”, a minimum period of 24 hours will be contemplated from the moment the offer is made until it is accepted so that the user can reflect beforehand on the decision and thus avoid compulsive purchases.
Likewise, the new legal framework will force aspects such as conditions to be mentioned in the promotion of quick loans, microcredits or revolving cards instead of focusing on immediacy, and processes based on automation and Artificial Intelligence will be introduced. The regulation should have been approved on November 20.
In Spain, any company can offer loans without being under the umbrella of the supervision that monitors the financial credit establishments and the banks themselves. This has caused digital platforms for quick loans to emerge, but at the cost of interest that could be classified as usury. As they are not subject to supervision, they may not meet certain requirements, such as evaluating whether the client has the capacity to repay the loan. Now with the regulatory change they will be required to be registered.
