Regulatory Alerts2021-06-02
Added · Updated
Instruction No. 8/2021
The Bank of Portugal establishes maximum interest rate ceilings for consumer credit contracts concluded in the third quarter of 2021, effective July 1, 2021. The instruction sets specific maximum Effective Annual Percentage Rates (APR) for categories including personal credit, education, health, renewable energy, equipment leasing, and credit cards, as well as a maximum nominal rate for credit overdrafts. Financial institutions must ensure that the charges applied to these contracts do not exceed the published limits, although the freedom to negotiate other financing conditions remains intact.
Instruction No. 8/2021 BO No. 5/2021 2nd Supplement • 2021/06/02 .................................................................................................................................................................................................. 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 3rd quarter of 2021
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 publishes quarterly the maximum rates for the different types of credit, to be applied 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:
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Consumer credit contracts, concluded 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 3rd quarter of 2021, the maximum rates set out in the tables below apply to each type of credit contract:
3rd quarter 2021
| Maximum APR | Credit Type | |
|---|---|---|
| 6.5% | Personal Credit | |
| Purpose: Education, Health, Renewable Energies and Financial Leasing of Equipment | ||
| 13.0% | Other Personal Credits (no specific financing, home, consolidated and other purposes) | |
| 3.3% | Car Credit | |
| Financial Leasing or ALD: new | ||
| 4.8% | Financial Leasing or ALD: used | |
| 9.2% | With retention of ownership and others: new | |
| 11.8% | With retention of ownership and others: used | |
| 15.6% | Credit Cards, Credit Lines, Bank Current Accounts and Overdraft Facilities |
3rd quarter 2021
| Maximum Nominal Rate (TAN) | ||
|---|---|---|
| 15.6% | Credit Overdrafts |
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The types of credit contracts listed in the previous tables 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 July 1, 2021.