The Development Ministry is attempting to end the high interest rates mainly on consumer loans and credit cards through a bill that incorporates a European Directive, albeit with a delay compared to the deadlines set by Brussels.
The bill has been as put up for consultation until June 29 before being tabled in Parliament for voting in July. It will not have retroactive effect and the new terms in loan contracts will apply to those concluded from November 20, onward.
It concerns loan contracts without collateral on real estate and for amounts up to €100,000. So it mainly concerns consumer and repair loans, as well as credit cards, but not mortgages.
Article 40 of the draft law under consultation provides for the imposition of an upper limit on the amount of the total annual effective interest rate (AER) – the loan may not exceed 30% to 50% of the AER – as published on a quarterly basis by the Bank of Greece.
The exact percentage will be determined by decision of the Minister of Development and the Minister of Finance, in collaboration with the Governor of the Bank of Greece.
The same article caps the amount of the increase in the principal of the loan upon repayment.
The maximum total cost of credit to the consumer, including interest, charges and expenses of any nature, is set at 60% of the principal amount of the credit for credit agreements with a duration of up to four years; it is set at 70% for credit agreements with a duration of more than four and up to eight years; and it is set at 75% for loan agreements with a duration of more than eight years.
The two categories of ceilings apply to loan agreements with both fixed and variable interest rates. Credit cards are excluded from the second ceiling.
In an effort to avoid hidden charges, the bill stipulates that the imposition of costs of credit agreements is permitted only if these costs correspond to fees for special services provided by the creditor, or to actual expenses for third parties, and are not intended to cover the operating costs of the creditor.
The bill provides for greater clarity and coverage for both creditors and borrowers if the delay in debts reaches a stage before the activation of enforcement measures.
Read the full article at ekathimerini.com →📄Source document: Draft Law on Consumer Loan Interest Rates
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ekathimerini.comIndependentCenter3 days agoThe Greek Development Ministry is proposing legislation to cap consumer loan interest rates, incorporating a European Directive with a delayed implementation. The proposed law sets limits on the total annual effective interest rate (AER), restricts increases in the principal upon repayment, and caps the overall cost of credit at 60% of the loan principal for short-term agreements. The bill is currently open for public consultation until June 29 and will be voted on in July. The new rules would apply to unsecured loans up to €100,000, excluding mortgages.
Bias read (Center): The article presents factual details about proposed legislation without overtly favoring any political side. It describes the policy measures neutrally, focusing on procedural aspects such as consultation periods, legal provisions, and implementation timelines. There is no evident framing that leans
Official sources cited
- government Draft Law on Consumer Loan Interest Rates
- government Bank of Greece
GR