The cost of each financial liability usually consists of interest and commissions and fees. In addition, the borrower taking out a loan and failing to meet the repayment date must bear the costs of the recovery procedure and penalty interest. How much can the borrower cost the loan in the end?
Interest cost limit – currently at the level of 10% per year and non-interest cost limits regulate the amount of final costs associated with the loan.
Maximum interest on the liability
The loan is usually a payable obligation, and the remuneration for the lender is primarily interest. If the loan is granted in the amount of up to USD 255 550, it will be considered a consumer loan under the relevant provisions. Also these regulations indicate the limit of interest costs related to the granted loan.
The maximum amount of interest on the loan, as well as on other consumer loans, may not exceed twice the statutory interest on an annual basis. In turn, statutory interest is equal to the sum of the reference rate of the National Bank and 3.5 percentage points. Currently, this rate is only 1.5 percent, so after increasing it by 3.5 percentage points we get 5 percent. This means that the lender will not be able to collect from the borrower, on the loan granted, interest higher than that calculated at a 10% interest rate.
Non-interest costs also limited.
Loan companies could quite freely shape their policy of fees and commissions charged to customers in relation to the loan granted. This is no longer possible today. Among the costs associated with the loan, there are also non-interest costs, not related to the interest normally charged by the lender. Pursuant to the Act on Financial Market Supervision and the Act on Consumer Credit, a non-interest cost limit was introduced. Their amount may not exceed the sum of:
- 25% the total loan amount and
- 30 percent variable amount depending on the loan period and loan amount.
It is worth emphasizing that all non-interest charges related to the loan may not exceed 100%. total loan amount. The new regulations have imposed on entrepreneurs conducting loan operations the obligation to return to the consumer all fees if the loan is ultimately not disbursed and the loan agreement is not concluded.