Legislation on interest rates on consumer loans, ie unsecured loans, has been approved by Parliament. Under the new law, the maximum permitted interest rate on consumer credit is 20%. In addition to this, the loan can be charged up to $ 150 per year. The law will enter into force on September 1, 2019.
Reduce the cost of consumer credit
The purpose of the legal reform is to reduce the cost of consumer credit and to reduce the payment burden of consumer credit. Currently, interest rates on loans over $ 2,000 are not regulated at all and the maximum interest rate for smaller loans is 50%.
The interest rate ceiling will have many implications for Finnish borrowing. The positive thing will be the lower interest rates on the loan products offered. In particular, the effective annual interest rates for smaller loans are currently over 20%. For larger loans, the changes will be less, as already the interest rates on loans over $ 10,000 start well below 10% and only rarely do real rates exceed 20%.
Decrease in interest rates on loans also means changes in the basis for granting loans
The change will also have a different impact on the loan market in Finland. Some smaller and more expensive companies will probably stop lending completely. The customers of these companies will have to apply for a loan from another company in the future. A decrease in interest rates on loans also means changes in the basis for granting loans.
Lower interest rates reduce the risk taking by loan companies
Lower interest rates reduce the risk-taking by loan companies and tighten customer criteria. After the beginning of September, it is quite likely that some of the customers currently using consumer credit will no longer receive new loan offers from market-based companies. At this stage, however, it is difficult to say how many of the borrowers will be affected by this change.
It is worthwhile to consider the interest rate and other terms of the loans already at this stage. By thoroughly comparing and competing with banks and financial institutions, you can make significant savings with little effort. Start your loan consolidation here