Government to discuss proposal to set caps on consumer loan costs

When providing consumer loans, a maximum annual percentage rate of charge will likely be introduced. This is proposed in a draft amendment to the Consumer Credit Act that the government will discuss on Monday. The proposal has been criticized by the Association of Non-Bank Loan Providers (APNÚ). According to the association, some applicants – especially those with low incomes – would lose access to legal loans and could turn to the black market.

The proposal sets a maximum cost for loans with a maturity of less than 12 months and an amount of up to 20,000 crowns. The cap includes a fixed fee of 2,000 crowns as the cost of providing the loan. An additional amount would be added based on the loan size, the loan period, and the maximum possible interest rate. This interest rate would be derived from the Czech National Bank’s base rate.