The latest amendment to the Anti-usury Act was published in 2016. Since then, from the perspective of borrowers, much has changed in the black. Bandit loans from APRC above 1000% have been successfully shortened, though not quite. There are still some unscrupulous loopholes in the law used by dishonest loan companies. Will the new anti-usury act, which is to come into force in the first half of 2019, introduce significant changes? An editorial over at barsugliafarms.com
Unfortunately, there are still a lot of companies on the market that try to take advantage of customer ignorance and trust. Although the maximum cost of loans has been severely limited, companies still have some room for maneuver, e.g. when extending their maturity. The new project of the Ministry of Justice wants to curb the rip-off, increase security in installment purchases, and prevent dramatic stories in which a deceived borrower loses all the property of his life. The new anti-usury act also provides for stricter penalties for dishonest lenders.
Safer shopping in installments
Unregulated law with installment purchases gave great opportunities to trick customers. In many cases, additional fees could be freely set, which meant huge losses for the customer. The new anti-usury act will introduce an upper limit. Purchase installments undertaken for a period of 12 months or more will not be associated with additional costs higher than 45% per annum. However, if you purchase in installments for a period equal to or less than 6 months, the upper cost limit will be 32.5%. It comes of course from non-interest costs. The maximum interest rate on installment purchases will remain unchanged at 10%.
Lower limits on non-interest charges for payday loans
A real breakthrough is being prepared on the payday market. The current law assumes that the total cost of taking a loan may not exceed 100% of its value per annum. This limit will be very clearly reduced. At present, loan companies will be able to charge a maximum of 45% of non-interest costs per year. However, this is not all! If the customer chooses payday loan with a repayment deadline of 30 calendar days, the upper cost limit may not be higher than 22%. As in the case of installment purchases, the upper limit of nominal interest is 10%.
Similar changes will come into force for long-term loans and credits (the upper limit of consumer loans is $ 255,550). The non-interest cost limit will be reduced to 45%. However, the loan granted on the basis of a civil law agreement cannot be higher than 25% of the amount borrowed per year.
More fair collateral for loans
The Ministry of Justice also wants to prevent the drama of people who lost their homes or apartments due to unfair loan or credit terms. The planned amendments to the Anti-usury Act assume that the loan collateral cannot be higher than the loan amount increased by 45%. The loan agreement may not allow the transfer of property rights in the form of collateral. Changes will also appear in bailiff executions. Bailiff proceedings cannot be implemented if the total debt value does not exceed 5% of the value of the house or flat.
Severe penalties for dishonest lenders
For many years, experts have recognized the problem of impunity loan sharks who have unscrupulously used legal loopholes to deprive people of property. Now, bending the rules and unfair practices will be punished more severely. Still, this idea is the most controversial. The Act provides for imprisonment from 3 months to 5 years for any lender who requests repayment twice as high as the maximum.
According to experts, the penalty should apply to all lenders who have violated the anti-usury law . Certainly this is a step in the right direction, but the penalties and limits imposed on them seem a bit too mild. In Germany, you can be imprisoned for up to 10 years for usury practices .