The loan is a useful financing tool when the person does not have enough money to purchase possessions or the necessary services he needs. For a loan taken out with the intention of making life easier not to turn into a generator of problems, it is recommended to choose the most advantageous loan. The National Bank of Moldova, in partnership with the Independent Think Tank “Expert-Grup”, presented the conditions to be taken into account when raising loans. This information is provided as part of a set of informative materials on various topics in the financial sector, intended for consumers of all ages, IPN reports.
According to the central bank, the lender is obliged to provide the consumers with the necessary information to allow them to compare a number of offers. Therefore, in the process of analyzing the offers, the person must ask the lending institution for all the necessary information in order to make a well-founded decision. Therefore, it needs to take into account several aspects, such as comparing the cost of the loan, the repayment conditions and the pledge.
In addition to comparing the cost of the loan with several offers, there are other elements that should be taken into account when applying for a loan so as not to allow the transformation of a good loan into a risky loan. As a loan can be granted for a long period of time, there are a lot of factors that can change during this period and affect the repayment capacity. Therefore, it is important for the person to anticipate the main risks for the duration of a loan agreement. These are interest rate, currency, collateral execution risks, as well as the risk of obtaining a negative credit history.
“After you have chosen the most advantageous loan offer, the next step is to sign the loan agreement itself. Before signing a contract, you need to examine all the details once again because it is important to know all the conditions and understand what you are assuming. The provisions of the contract must be presented in a clear and readable way, with text of the same size and without unclear clauses. You should be warned about the presence of smaller written texts. This is not allowed and will represent a potential signal that there is something to be hided,” warned the NBM.
The contract must include detailed information on the loan amount, interest rate and conditions under which it can be modified, related commissions, requested guarantees, repayment schedule. Contractual provisions that give the creditor the right to unilaterally modify the contractual clauses without concluding an addendum, accepted by the person as debtor, are prohibited.
In case of a consumer loan, the person has the right to revoke/terminate the loan agreement without particular justifications during 14 calendar days from the date of conclusion of the loan agreement. In order to avoid abuses in setting exaggerated costs of consumer loans and to protect the consumer from over-indebtedness, the legal framework comes with a number of important provisions. The lender (bank or non-bank lending institution) is not entitled to apply an annual interest rate higher than 50%, and all other payments for the loan (commissions, fees, penalties, late payment interest and any other type of payment) per lending day cannot be higher than 0.04% of the total loan amount.
The lender cannot set a total cost of the loan higher than the amount disbursed according to the contract. In other words, the cost of the loan cannot exceed the amount of the loan made available. “Be careful that this provision does not apply to loans intended for the purchase, construction or renovation of a home secured by real estate,” said the NBM.
If a loan in the amount of up to 50,000 lei was raised and the person is late in making payments for more than 30 days, the creditor is no longer entitled to conclude other loan agreements with this as long as the due payments are not made. This is a measure to avoid over-indebtedness and not to allow the consumer to fall into the trap of the vicious circle of debts.
The detected violations can be reported through a petition to the National Commission for Financial Markets, which is the authority empowered to ensure the protection of financial consumers.
The National Financial Education Campaign is carried out with the support of USAID (MISRA).
