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Amendments to the Consumer Lending Act, whose proposal will be brought before the Government tomorrow, would determine that loan agreements with more than 20 percent interest rates and a fiscal margin over the repayment period should not be regulated the maximum interest rate on home loans, limited the effective interest rate of consumer loans, which, under current conditions, could not exceed 11 percent, and specified issues related to the current account overdraft.

The amendments have been proposed by the Ministry of Finance


Which, among other things, points out that a series of amendments to the current law seek to ensure adequate consumer protection in order to put them in an equal position with creditors.

Increasing cases of inability to pay obligations and almost 300,000 blocked accounts are reported about the difficult situation of citizens, with an increasing percentage of loans that citizens cannot repay, so the share of bad loans in total home loans increased from 5 percent in 2008 to 12.5 percent in 2012.

The proposed changes would introduce a provision whereby fees related to approved loans must be linked to the actual cost of granting the loan, and prohibit the introduction of new fees after the conclusion of the loan agreement.

In addition, the Minister of Finance will define the rules in more detail in order to avoid that they contain hidden elements that raise the price of loans and the possibility of using unjustified fees.

Also, banks or creditors will be obliged to warn the consumer in writing about the risks associated with changes in exchange rates, changes in interest rates and loss of income of the consumer.

When negotiating a variable interest rate

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The parameters that can be used as a basis for changing the contractual variable interest rate (EURIBOR, LIBOR, NRS or average interest rate on deposits in a particular currency) are precisely defined, and would also prevent the growth of the interest margin after contracting. credit agreement.

Even contracts concluded before the entry into force of the proposed changes, for which no interest rate change parameters were defined, would explicitly stipulate that, in such contractual relationships, the creditor must negotiate variable parameters, a fixed margin and change periods as a basis for any future changes in the interest rate. interest.

At the same time, for those loan agreements where the exchange rate appreciated more than 20 percent during the repayment period, the interest rate or the fixed margin should not be higher than the initial ones, which, according to the Ministry, protects the most vulnerable group of citizens, which was exposed not only to the rise in interest rates, but also to the significant growth of the exchange rate.

The proposed changes would set a maximum interest rate on home loans


Which should not be higher than the average interest rate on approved home loans in currencies (euro, kuna, Swiss franc) in Croatia, plus one-third.

For other consumer credit categories (except residential), the maximum allowed interest rate may not be higher than the average interest rate plus one half.

The average interest rate on currencies is published by the Croatian National Bank on its website.

The ministry points out that it provides citizens with additional protection against excessive growth in interest rates, unfavorable interest rates and excessive borrowing, which is particularly important in housing loans.

The state’s intervention is explained by the fact that interest rates on housing loans in Croatia are above the average of EU Member States, especially in the Eurozone countries, where the average interest rate is 3.35 percent and in Croatia it is 5.37 percent.

The Ministry also warns about the problem of approval, especially the abolition of overdrafts on citizens’ current accounts (so-called minuses), where decisions on reducing the bank’s minus are made unilaterally and do not adequately warn citizens, or offer a gradual transition to a reduced amount of approved overdraft.