Loan companies regulations Additionally: companies and non-bank loans

The amended Consumer Credit Act, which entered into force on March 11, 2016, introduced many solutions that strengthen consumer protection in the segment of consumer loans granted by loan companies and banks..

PRE-TRIAL FEE

The creditor is obliged to refund to the customer all costs and fees paid by him before the contract was signed, in the event that it was not concluded. Prior to the amendment, many dishonest loan companies swindled money from potential customers, promising a loan that they did not actually provide.

LIMITATION OF LOAN COSTS

Two new limits on loan costs have been introduced

a) Before the amendment, there was a maximum interest rate limit. Nothing has changed here. From 1 January 2016, it is calculated as twice the sum of the NBP reference rate (currently 1.5%) and 3.5% (in total 5%). That is 2 × 5% = 10%. This is the maximum nominal interest rate on consumer loans.

b) Maximum ceiling of non-interest costs. The limit limits all costs, except for interest to be borne by the consumer in connection with the consumer credit agreement. “All costs”, ie the limit includes commission, fees, costs of additional services (eg home service), insurance. Non-interest loan costs can not exceed the sum of two components: 25% of the loan – it is a fixed part and 30% of the loan value on a yearly basis – a variable part that depends on the duration of the loan agreement.

The amount of costs depends on the time of crediting: the shorter it is, the lower the fees.

How does it look in practice?

A loan of PLN 1000 for 12 months. The maximum amount of fees is PLN 550 (25% + 30%).
A loan of PLN 1000 for 6 months. The maximum amount of fees is PLN 400 (25% + 15%).
A loan of PLN 1000 for one month. The maximum amount of fees is PLN 275 (25% + 2.5%).

c) Limit limiting the amount of fees charged for repayment, including interest for delays. These costs have been limited to the maximum interest for delay specified in the Civil Code.

The limit is calculated as twice the NBP reference rate (currently 1.5%) + 5.5%. The limit is therefore 14% per annum (1.5% + 5.5% = 7% x 2 = 14%).

Example : In the case of a delay in payment of PLN 100, the related fees (including penalty interest), may not exceed PLN 14 annually, ie for a month it amounts to PLN 1.17. Charges collected due to arrears in repayment include, among others, interest on overdue debt, requests for payment (postal, telephone, text messages), costs of debt collection, etc.

LOANING

It is no longer possible to extend the loan multiple times, which was previously associated with fees. The loan could be practically extended indefinitely. Fortunately, it is not because, by granting another loan within 120 days (4 months) from the date of the first loan, all charges collected at that time must fit within the non-interest cost limit calculated on the loan amount whose repayment is postponed. So in some loan companies, we can extend the loan, and in others it will not be possible.

A LOAN COMPANY AS BUSINESS

Loan company how to set up? Legal requirements related to running a business consisting in the granting of consumer loans. Not every entity can run a business in the non-bank cash loan segment. The Act clearly defines the requirements:
organizational and legal : joint-stock company or limited liability company,
capital : companies must have at least PLN 200,000 in share capital,
personal : the authorities of the entity can not be held by persons convicted for economic crimes.

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