Instruction No. 04/2020 - Revision of Maximum Rates Applicable to Consumer Credit Contracts in the First Quarter of 2020

Instruction No. xx/xxxx
BO No. xx • xx-xx-xxxx
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Topics
Supervision :: Behavioral Supervision
Mod. 99999940/T – 01/14
Index
Text of the Instruction
Text of the Instruction
Subject: Revision of maximum rates applicable to consumer credit contracts in the 1st quarter of 2020

Decree-Law No. 133/2009, of June 2, which transposed into the internal legal order Directive No. 2008/48/EC, of April 23, regarding consumer credit contracts, established the regime of maximum rates applicable to these contracts.

According to Article 28 of Decree-Law No. 133/2009, as amended by Decree-Law No. 42-A/2013, of March 28, the maximum rates for each type of credit are determined based on the average Effective Annual Percentage Rates (TAEG) 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 TAEG of the entire consumer credit market, plus 50%.

In compliance with the law, the Bank of Portugal issued Instruction No. 22/2019, which published the maximum rates applicable to the different types of consumer credit contracts to be concluded in the 1st quarter of 2020. However, the change in the Stamp Duty rates applicable to consumer credit contracts, which occurred with the entry into force of the 2020 State Budget, makes it necessary to revise the aforementioned maximum rates.

The rates defined in this Instruction constitute maximum limits on the charges that can be contracted in each type of credit contract, and under no circumstances may they 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, in its current wording, the Bank of Portugal determines the following:

Instruction No. xx/xxx BO No. xx • xx-xx-xxxx
Topics Supervision :: Behavioral Supervision
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Mod. 99999940/T – 01/14

1. Consumer credit contracts, concluded under Decree-Law No. 133/2009, of June 2, must observe the maximum rate regime defined in Article 28.

2. Until the end of the 1st quarter of 2020, the maximum rates set out in the tables below apply to each type of credit contract:

Maximum TAEG
Personal Credit
Purpose Education, Health, Renewable Energies and Financial Leasing of Equipment 6.5% Other Personal Credits (without specific financing, home, consolidated and other purposes) 13.3% Car Credit Financial Leasing or ALD: new 4.3% Financial Leasing or ALD: used 5.7% With retention of ownership and others: new 9.7% With retention of ownership and others: used 12.3% Credit Cards, Credit Lines, Bank Current Accounts and Overdraft Facilities 16.0%

Maximum TAN
Credit Overdrafts 16.0%

3. The types of credit contracts 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.

4. This Instruction revokes Instruction No. 22/2019.

5. This Instruction enters into force on the date of entry into force of the Law approving the 2020 State Budget.