Regulatory Alerts2019-03-13
Added · Updated
Instruction No. 6/2019: Disclosure of Maximum Rates Applicable to Consumer Credit Contracts in the Second Quarter of 2019
The Bank of Portugal establishes maximum annual effective global rates (TAEG) and maximum nominal annual rates (TAN) for various consumer credit contracts for the second quarter of 2019. These limits apply to personal credit, education and health financing, renewable energy, equipment leasing, automobile loans, credit cards, and overdrafts, with specific caps ranging from 4.8% to 16.1%. The instruction mandates that contracts signed in the subsequent quarter must adhere to these defined maximum charges, which are calculated based on previous market averages plus statutory margins. The regulation enters into force on April 1, 2019.
Instruction No. 6/2019 BO No. 2/2019 Supplement • 2019/03/13 .................................................................................................................................................................................................. 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 2019
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, in the current wording, the maximum rates for each type of credit are determined based on the Average Annual Effective Global Rates (TAEG) 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 TAEG 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 signed 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, in its current wording, the Bank of Portugal determines the following:
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Consumer credit contracts, signed under Decree-Law No. 133/2009, of June 2, must observe the maximum rate regime defined in Article 28.
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In the 2nd quarter of 2019, the maximum rates set forth in the tables below apply to each type of credit contract:
2nd quarter of 2019 TAEG maximum Personal Credit Purpose Education, Health, Renewable Energies and Financial Lease of Equipment 6.4% Other Personal Credits (without specific financing, home, consolidated and other purposes) 13.6% Automobile Credit Financial Lease or ALD: new 4.8% Financial Lease or ALD: used 5.9% With reservation of ownership and others: new 9.7% With reservation of ownership and others: used 12.3% Credit Cards, Credit Lines, Bank Current Accounts and Overdraft Facilities 16.1%
2nd quarter of 2019 TAN maximum Credit Overdrafts 16.1%
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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.
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This Instruction enters into force on April 1, 2019.