PUBLICATIONS
Specific Consumer Rights in Loan Agreements Under € 75,000 Euros
Where a credit agreement (i.e., loan) between a consumer and a credit institution concerns a total amount of credit between €200 and €75,000 it is covered by Law 106 (I)/2010 on Consumer Credit Agreements.
The above Law contains specific information obligations of credit institutions to the consumer which should be contained in advertising before and after the conclusion of the contract with the consumer. The Law also contains specific obligations for assessing the creditworthiness of the consumer.
In relation to advertisements, for example, the Credit Institution should indicate the total amount of the credit, the debit interest rate, the APR and the duration of the credit agreement.
Prior to concluding the contract, the creditor should provide the consumer with standard European consumer credit information such as the creditor’s identity, key features of the credit product and the cost of credit.
According to the Law, before concluding the credit agreement, the credit institution assesses the creditworthiness of the consumer based on sufficient data obtained on a case-by-case basis by the consumer and research in an appropriate database.
In case of a complaint from a consumer to a company regarding a contract it has with a company, the Consumer has the right to contact the Cyprus Consumer Center for Alternative Dispute Resolution.
The credit agreement should contain specific information and the consumer should receive a copy of it. The information that should be included in the credit agreement is the following: the type of credit, the identity of the parties, the duration of the credit, the total amount of credit, the APR, the number and frequency of payments, the interest rate arrears, information on notarization fees, the procedure to be followed for exercising the right of termination.
Two important rights provided to the Consumer in case of a credit agreements covered by the above Law are the right of withdrawal as well as the right of early repayment of the loan.
Right of Withdrawal
A consumer has the right to withdraw from the credit agreement within 14 days from the day of concluding the agreement or receiving the terms of the agreement and its information. This means that the consumer can cancel the contract at any time within 14 days.
The time limit is deemed to have been complied with if the notice, given in writing or on another durable medium made available to the creditor and to which the latter has access, is sent before the expiry of the period; the capital and accrued interest on this capital must be paid from the date of withdrawal without undue delay and no later than 30 calendar days from exercising the right of withdrawal to the creditor.
The creditor is not entitled to any other compensation from the consumer in the event of withdrawal, other than compensation for non-refundable fees paid by the creditor to any public administrative service.
Right of Early Repayment
Under this right, the creditor is entitled to compensation only for any costs that are directly related to the early repayment of the loan provided that the early repayment is made within a period of time for which the debit interest rate has been set. The compensation may not exceed 1% of the price of the credit repaid provided that more than one year remains before the agreed expiration of the credit. If it does not exceed one year, the compensation may not exceed 0.5% of the price of the credit repaid early.
This article has been prepared by the Cyprus Consumer Center for Alternative Dispute Resolution and is co-financed by the European Union under the Consumer Program 2014-2020.
The Cyprus Consumer Center for Alternative Dispute Resolution is a Body approved by the Consumer Protection Service and notified to the European Commission.
