Regulatory Alerts2024-03-06
Added · Updated
Instruction No. 3/2024 on Maximum Interest Rates for Consumer Credit Contracts in the Second Quarter of 2024
The Bank of Portugal establishes maximum effective annual percentage rates (APR) and maximum nominal annual rates (NAR) applicable to consumer credit contracts concluded in the second quarter of 2024. Specific caps include 8.5% for education, health, renewable energy, and equipment leasing; 15.6% for other personal credits; 6.3% for new car leasing; and 19.0% for credit cards and overdrafts. These limits apply to contracts signed from April 1, 2024, onwards, without restricting the freedom to negotiate other financing conditions.
Instruction No. 3/2024 BO No. 2/2024 Supplement • 2024/03/06 .................................................................................................................................................................................................. 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 2024
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 current wording, the maximum rates for each type of credit are determined based on the Average Effective Annual Percentage Rates (APR) practiced in the market by credit institutions in the previous quarter, increased by a quarter. Additionally, the maximum rate of any type of credit cannot exceed the average APR of the entire consumer credit market, increased by 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 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, the Bank of Portugal determines the following:
-
Consumer credit contracts, concluded under Decree-Law No. 133/2009, of June 2, must observe the maximum rate regime defined in Article 28.
-
In the 2nd quarter of 2024, the maximum rates set out in the tables below apply to each type of credit contract:
2nd quarter of 2024
| Credit Type | Maximum APR |
|---|---|
| Personal Credit | 8.5% |
| Purpose: Education, Health, Renewable Energies, and Financial Leasing of Equipment | 8.5% |
| Other Personal Credits (no specific financing, home, consolidated, and other purposes) | 15.6% |
| Auto Credit | |
| Financial Leasing or ALD: New | 6.3% |
| Financial Leasing or ALD: Used | 6.8% |
| With retention of ownership and others: New | 11.0% |
| With retention of ownership and others: Used | 14.2% |
| Credit Cards, Credit Lines, Bank Current Accounts, and Overdraft Facilities | 19.0% |
2nd quarter of 2024
| Credit Type | Maximum NAR |
|---|---|
| Credit Overdrafts | 19.0% |
-
The types of credit contracts listed 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.
-
This Instruction enters into force on April 1, 2024.