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They put a ceiling on the interest rate on quick loans –

/ world today news/ The authorities are considering interest rates for small fast loans to be pegged at 50-60% per year.

The regulation will cover only loans up to BGN 400, left-wing MPs told Trud. They are preparing legislative changes, which will set a ceiling of 40-50 percentage points on the legal interest rate, which is currently equal to 10% plus the main interest rate (ORP) of the BNB – 0.03%. This means that most likely the maximum interest on a loan of up to BGN 400 will be 50-60% per year. Thus, for a loan of BGN 400, the maximum price increase will be BGN 240 per year.

Currently, there is no limit to the increase in the cost of loans, as a result of which the client usually signs up to repay an amount that is many times greater than the principal amount. It’s no secret that the annual percentage rate (APR) on quick loans, which includes not only interest but also fees, currently reaches hundreds, even up to 2000-3000%.

However, experts admit that APR and APR are not the most accurate measure of the cost of small and emergency loans. For example, for a loan of BGN 100 with a repayment amount of BGN 120 with a repayment term of 1 month, the APR is about 240%, but this is not surprising. If the interest on a loan of BGN 100 is limited to 60% or BGN 60 per year (BGN 5 per month), this may make the business model of quick loans meaningless.

At the same time, the problem with quick loans over BGN 400 will remain unresolved. Currently, for example, for a loan of BGN 1,000, BGN 4,000-5,000 is often returned. return over BGN 10,000. The managers are adamant that they will not regulate the interest on these loans, because they fall within the scope of the European directive on consumer loans, where there is no limit on interest rates.

There is a limit on the increase in the cost of loans only for pawnshops – up to 3% per month. To get around it, they raised the fees. It is possible that this will also happen in the market of fast loans. The deputies do not plan to put a ceiling on the fees, but only to ensure that they are written in capital letters in the contract. / BGNES

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