In Ukraine this month will have a new law “On consumer lending”. In the is forbidden to specify false information about zero interest rates, in addition, financial institutions will be obliged to check the creditworthiness of their clients. This means that to get a loan without income certificate will be more difficult. The website “Today” found out that and how it will change after the adoption of the new law on consumer crediting in force.
New rules for banks and intermediaries
Ukrainians often learn about real interest rates only after signing the contract. It turns out that in addition to the “loan” and interest have to fees, fines and services which neither the is nor the branch of the financial institution it was not, stated in the explanatory note to law No. 2455. The authors found out that sometimes the real interest rate on the loan up to 135% per annum, while the average for the country ranges from 22 to 38%.
The new law “On consumer loans” requires banks and other financial institutions to report all expenses and rates. At this point, as stated during the round table on consumer credit, Deputy head of the NBU Ekaterina Rozhkova, the Central Bank is preparing amendments to the law. Now the document obliges to inform the borrower about the cost of credit, but information about the cost of intermediaries is optional. After the changes, a Ukrainian who takes the credit, get information about the amount of all payments. The national Bank has developed a methodology for calculating the total cost of credit to the borrower-natural person, in accordance with the provisions of the law of Ukraine “On consumer lending”.
If credit is given to the amount of more than 3200 UAH for a period of at least one month, the ad banks must provide all information and real interest rates. “In the calculation of the effective rate will include all loan interest and payments for other services of the lender associated with the loan. This requirement would apply only if promotional materials contain any data (numbers) on consumer expenditure”, – the document says.
“In the calculation of the effective rate will include all loan interest and payments for other services of the lender associated with the loan. This requirement would apply only if promotional materials contain any data (numbers) on consumer expenditure”, – the document says.
As explained by the program coordinator of the Department of economic growth, USAID Jacob Morrin, advertising of credits under the “0%” no solvency test in Ukraine will not be allowed. Jun 20 the law is in effect – the credit market will work by new rules.
What should indicate in the advertising:
- The interest rate on loans and its type (fixed or not)
- The effective annual interest rate
- The maximum period for which the loan is made
- It is impossible to indicate in the advertising
- The loan is at an interest rate of 0%
- For the loan don’t need the documents confirming solvency of the borrower
“The above information must be clear and accurate. If the above information is presented in written form, it should be the same font and displayed in the main text of advertising”, – the document says.
“If the above information is given in written form, it should be the same font and displayed in the main text of advertising”, – the document says.
The legislator obliges the Bank or other financial institution to assess the creditworthiness of the borrower. To do this, the Ukrainians will have to submit the relevant documents such as proof of income. Quickly to obtain loans only with a passport will become more difficult.
As the member of the financial services Commission Alexander Zaletov, the Ukrainians, who take out loans for an amount less than the minimum wage for a short time, take advantage of the provisions of the law can not. The expert is sure that the non-Bank financial institutions often give out such loans, and the rates may reach hundreds of percent.
Ukrainians will repay the loans in new
In Ukraine will change the order of repayment of the loan. Previously, the debtors primarily to repay penalties and interest, resulting in a “loan” is not actually changed. After the law came into force in the first place will be repaid the amount of overdue debt, and then “loan” and only after that – penalties. Parliamentarians believe that this will allow the debtors to get rid of the “infinite counter”.
Information about the real rate on the loan must be specified not only in advertising but also in the consumer loan agreement. This document must show the borrower prior to signing. In addition, the law provides that the contract can be signed in electronic form using digital signature.
The financial institution, the borrower must show:
- The name and address of the lender and its structural subdivisions through which consumer credit is provided
- The type of loan (conventional, on the terms of the overdraft etc.)
- The amount by which the loan can be issued
- The period for which credit can be obtained; existing forms of credit with a short description of the differences between them, including between the obligations of the consumer;
- The type of interest rate (fixed, manasas), the procedure for its calculation, including procedure changes, and any index applicable to the interest rate.
- The types of collateral of the loan required by creditdunce; the need for assessment of the collateral on the loan, and at whose expense this evaluation is carried out;
- The effective annual interest rate and indicative total cost of the loan on the date of providing information/