Good Financial wants to lower the maximum interest rate for consumer loans from the current 15% to 10%. On Friday, December 5, 2014, he opened the consultation process for a corresponding amendment to the regulation on the Consumer Credit Act.
He also suggests introducing a simple and clear calculation mechanism for the future and anchoring it in regulation.
Maximum interest rate
The maximum interest rate for consumer loans prevents misuse in the credit system. In addition to state price monitoring and the regulations against overreaching and usury, it protects consumers from over-indebtedness.
It also reduces the risk that financial institutions will increasingly issue risky loans due to a high-profit margin.
In 2003 the Good Financial set the maximum interest rate for consumer loans at 15% per year. The persistently low-interest-rate level now requires adjustment. According to the will of the legislator, the maximum interest rate should depend on the amount of the refinancing costs.
The Good Financial, therefore, proposes a calculation mechanism that is based on the costs that financial institutions, in turn, have to pay for the borrowed money. The maximum interest rate is made up of the three-month Libor determined by the
National Bank and a surcharge of 10 percentage points, whereby the value calculated in this way is rounded up or down to the nearest integer.
This currently results in a maximum interest rate of 10 percent.
What negative effects could this change have on consumers?
On the occasion of the introduction of the maximum interest rate, various arguments were raised against its introduction.
- People who did not have the best debtor qualities could no longer get loans in the future
- The result would be less generous lending due to falling earnings
- It could drive the consumer into illegality
A maximum interest rate of 12% would, therefore, be a reasonable solution. With moderately falling earnings, the credit banks could ensure that lending remained unchanged. You as a consumer would benefit twice. Apply for credit now