What Can You Not Conceal From Your Loan?
March 10, 2019
What can you not conceal from your loan?
Do you know what every credit product ad should contain? Do you know the mandatory information that the loan provider (or his financial agent) must provide to you before the loan agreement is concluded? We will summarize everything in the following lines.
Your ad must include a model loan example
The law stipulates that any advertising for consumer credit must state precisely, in a compulsory way, the mandatory information that is used to make a clear idea of what credit it is and whether it will be beneficial to you or not.
This data must be presented in a promotional material (whether it is a paper booklet or an advertising banner on the internet) in a representative example, from which you will clearly see how much a particular loan would cost you for a certain amount, interest and maturity.
For example, advertising for one of Home Credit’s loans provides such textual information with a model example:
“For a loan of € 2,400, repayment of € 49, interest of 16.85%, maturity of 84 months, APR 18.4% and total amount payable to consumers € 4,116.”
What, in fact, does advertising or any consumer credit offer have to contain by law?
- Interest rate (fixed, variable, or both = depends on the type of loan).
- Details of all fees associated with the loan (including their amount).
- Total loan amount (so-called principal = amount of money lending).
- Annual percentage rate of cost (= we recommend reading this article on RPMN ).
- Loan maturity.
- In the case of installment sales, the selling price of the goods and the amount of the advance must be stated.
- The total amount you have to pay and the amount and number of installments.
- If a loan is provided with a mandatory supplementary service (eg repayment insurance ), this must be clearly stated in the ad.
These mandatory data only relate to a loan loan, which includes at least one numerical value associated with it. Creditors most often attract low interest rates (eg ‘only 14% pa’). By yourself, the interest rate figure would not tell you much about its convenience or disadvantage for you. Therefore, in your interest, the law has determined that if a provider is attracting you for low interest on a particular loan, he must also include a precise calculation on a model example that includes all borrowing fees.
However, if it is only a general advertising of “our loans are the best on the market for the long term” and the provider does not promote a specific credit product in it, it is not necessary to mention the above mentioned data. In the vast majority of cases, however, providers always advertise specific loans, so it is a good idea to know that if something from the mandatory list is concealed, they violate the law.
What information must be provided to you before the loan agreement is concluded?
The loan provider or his agent (ie the merchant who represents him) must provide you with all relevant information before you can conclude a loan agreement to help you decide whether or not the credit terms and conditions are acceptable to you.
In particular, you should learn the following:
- what kind of loan is it (purpose, purpose, short-term, long-term, leasing, hire-purchase…)
- the total amount of the loan and the conditions for its use
- loan term and loan maturity date
- information about the goods and its price if it is a hire purchase
- on the interest rate of the loan (where interest changes during the term of the loan agreement, this information may not be concealed)
- the total amount you have to pay for the loan (= so you can see how much you will overpay)
- the annual percentage rate of charge (= must be given in the form of a sample to see how it was calculated and what all the fees except interest are included in it)
- the amount, number and terms of repayment of the loan
- the amount of any fees for the conclusion of the contract (eg notarial fees) or for maintaining a credit account
- the obligation to take out the loan repayment insurance
- the amount of penalty interest that the creditor may charge you if you are late with the installments
- credit security (eg if you have a guarantor or you have set up your property)
- about the consequences of defaulting the loan (= the creditor has the right to recover your debt from you and you can get to the bailiff’s hands )
- on the right of withdrawal from the loan agreement
- about the right to repay the loan before maturity and the amount of the fee that the creditor will charge for it
In paper form or on another durable medium (eg on a CD), you should receive a filled-in so-called “credit card” from the creditor before the loan agreement is concluded. standard European consumer credit information. If the creditor is unable to provide you (for example, because you are making a distance loan contract) in such a form, you have to get it in that form immediately after the conclusion of the contract.
TIP: If you are looking for a suitable loan that is tailored to your circumstances, try using the services of financial experts who will take over your current financial situation with you and offer you the right solution. Just fill out an online loan application and an agent of one of the non-bank companies we work with will call you by phone. Only you decide on the amount of borrowed amount, maturity, and thus the loan price. If the conditions of the offered loan do not suit you, you can refuse and wait for a better offer. In case of successful conclusion of the loan agreement, the financial injection of up to EUR 5000 in your account may be the next business day.