Regulatory Alerts2023-03-09
Added · Updated
Instruction (Historical) No. 7/2023
The Bank of Portugal sets maximum interest rates for consumer credit contracts concluded in the second quarter of 2023, effective April 1, 2023. The maximum Effective Annual Percentage Rate (APR) ranges from 4.1% for new financial leasing to 16.9% for credit cards and overdraft facilities, while the maximum Nominal Annual Rate (NAR) for credit overdrafts is set at 16.9%. These limits apply to all consumer credit contracts under Decree-Law No. 133/2009, though lenders remain free to offer lower rates.
Instruction No. 7/2023 BO No. 2/2023 3rd Supplement • 2023/03/09 .................................................................................................................................................................................................. Topics Supervision :: Behavioral Supervision Mod. 99999940/T – 01/14 Index Text of the Instruction Text of the Instruction Subject: Disclosure of maximum rates applicable to consumer credit contracts in the 2nd quarter of 2023
Decree-Law No. 133/2009, of June 2, which transposed into the internal legal order Directive No. 2008/48/EC, of April 23, on consumer credit contracts, established the regime of maximum rates applicable to these contracts.
According to Article 28 of Decree-Law No. 133/2009, in the wording in force, the maximum rates for each type of credit are determined based on the average Effective Annual Percentage Rates of Charge (APR) practiced in the market by credit institutions in the previous quarter, plus one quarter. Additionally, the maximum rate of any type of credit may not exceed the average APR of the entire consumer credit market, plus 50%. Applying the criterion defined by law, the Bank of Portugal quarterly discloses the maximum rates for the different types of credit, for application to contracts to be concluded in the following quarter.
The rates defined in this Instruction constitute maximum limits on the charges that can be contracted in each type of credit contract, and may in no case be referred to as "legal rates". The freedom to contract financing conditions remains, with the sole exception of compliance with these limits.
Thus, in the exercise of the competence attributed to it by Article 17 of its Organic Law and by Article 28 of Decree-Law No. 133/2009, of June 2, the Bank of Portugal determines the following:
- Consumer credit contracts, concluded within the scope of Decree-Law No. 133/2009, of June 2, shall observe the maximum rate regime defined in Article 28.
Instruction No. 7/2023 BO No. 2/2023 3rd Supplement • 2023/03/09 Topics Supervision :: Behavioral Supervision .................................................................................................................................................................................................. Mod. 99999940/T – 01/14
- In the 2nd quarter of 2023, the maximum rates set out in the tables below apply to each type of credit contract:
2nd quarter of 2023 Maximum APR Personal Credit Purpose Education, Health, Renewable Energies and Financial Leasing of Equipment 6.7% Other Personal Credits (no specific financing, home, consolidated and other purposes) 13.9% Auto Credit Financial Leasing or ALD: new 4.1% Financial Leasing or ALD: used 6.2% With retention of ownership and others: new 9.5% With retention of ownership and others: used 12.7% Credit Cards, Credit Lines, Bank Current Accounts and Overdraft Facilities 16.9%
2nd quarter of 2023 Maximum NAR Credit Overdrafts 16.9%
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The types of credit contracts set out in the tables above correspond to the credit categories defined in Instruction No. 14/2013, except for credit overdrafts which are defined in Decree-Law No. 133/2009.
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This Instruction enters into force on April 1, 2023.