Regulation of fast credits
Quick loans are an easy and safe way to get the financing we need. And, it may be that at some point we have wondered what laws protect us in case of requesting one of these loans . In this article, we are going to see what regulations regulate fast loans and if there is any State agency that is in charge of supervising the entities that grant this kind of loans.
What regulations regulate fast loans?
Fast loans are currently regulated by different regulations. Since there is no specific law for these loans, this type of financing is regulated by different laws that affect its different aspects , such as electronic commerce or advertising. Some of these regulations are:
- Royal Legislative Decree 1/2007, of November 16 General Law for the Defense of Consumers and Users.
- Organic Law 15/1999 on the Protection of Personal Data.
- Law 34/2002 that regulates the services offered over the Internet and electronic commerce.
- Law 34/1988, of November 11, General Advertising.
In addition to the laws that we have mentioned, fast credit companies must also comply with Law 16 // 2011, of June 24, on Consumer Credit Contracts.
Consumer Credit Contract Law
We know it popularly as the consumer credit law and it is in charge of regulating the contracts of personal loans of more than $ 200. Loans for the purchase of homes, or mortgages, as well as personal loans for amounts less than that amount are not regulated by this law.
Therefore, in the event that we request a quick loan of more than $ 200, our loan contract must be adjusted and comply with the articles of this law.
When we are going to request a quick loan, we must take into account some aspects that must be fulfilled in the contract so that it is in accordance with the law. Firstly, there are some rights that the entity must respect and, secondly, there are a series of data that must appear in the contract. Let's see what they are.
Any personal loan of more than 200 US dollars must comply with the following rights, and this must be specified in the contract.
- Right to complete contractual information. From the moment it is published, we have the right to be informed of all aspects related to the cost and conditions of fast credit. This information must be transparent and real.
- Right to early amortization. In any type of loan, we will have the right to repay all or part of the capital in advance. Although, in some cases, entities may charge us a commission for this process.
- Right to a binding offer. If we want, the entity has the obligation to deliver us a binding contract with the terms we have agreed upon, and it must be valid for at least 14 days.
- Right of withdrawal. If during the 14 calendar days following the signing of the loan contract, we regret our request, we will have the right to withdraw from the contract and return the money. In no case, the entity may impose a fine or charge us commissions for this decision.
Information about the loan
A series of information about the loan must appear in the contract. These are those required by the Law on Consumer Credit Contracts:
- General information about the loan. This information includes the total amount, the term in which we will have to repay the credit, the total capital that we will return and the monthly installments that we will pay.
- Interests. Two percentages must appear in the contract. Both the interest rate that will be applied to the loan (TIN) and the Annual Equivalent Rate (APR) calculated according to the loan conditions.
- Commissions. If the loan has commissions for opening, study, early repayment, modification ... and how much they amount.
- Links. If it is necessary, or not, to contract insurance or any other type of product linked to the loan and what conditions this link has. In addition, if due to the contracting of the product, the conditions of any aspect of the loan change, it must also be specified in the contract.
- Consequences in case of non-payment. If we did not pay the loan, what would happen? How much would the default interest or commissions for claiming debtor positions amount to or what percentage would it be?
In addition to appearing in the contract, when we learn about the loan, the entity must offer us this information in clear language. In this way, we can decide whether it is a financing offer that interests us, or not.
Although we have already mentioned it, we must also talk about it. The General Law for the Defense of Consumers and Users , which came into force in December 2007, is responsible for avoiding the effect of abusive clauses in non-mortgage loan contracts .
As they are adhesion contracts, they have clauses that as consumers we cannot negotiate, and this legal text ensures that they do not harm us. Thanks to this, clauses such as the modification of the total cost of credits are eradicated, as long as we do not give our consent; those of late interest and all those that prevent making an early repayment of the credit or the settlement of the contract if it does not offer us what we asked for.
Since May 25, 2018 with the entry into force of the RGPD, there are the same rules regarding data protection for all companies that carry out their activity in the EU.
Furthermore, based on the Usury Repression Law in force since 1908 , also known as the Azcárate Law, the Supreme Court considers "usury" to the disproportionate application of interest on revolving cards.
We refer to the Supreme Court ruling number 149/2020 , favorable to the rights of the consumer of revolving cards affected by the collection of interest considered abusive.
Faced with this situation, justice is on the consumer's side and allows us to claim the return of the interest paid for more that belongs to us .
In this way, we can recover our money and cancel the link with the credit institution that issued the card.
Are the entities that grant mini-credits supervised by the State or another public body?
The entities that are currently dedicated to granting fast loans are not supervised by the Bank of United States , and neither are they supervised by the CNMV (National Securities Market Commission). In fact, these private lenders are not required to be listed in the AECOSAN (Spanish Agency for Consumption, Food Safety and Nutrition) either.
But, does this mean that companies that grant short-term loans are not supervised by any type of body or association? No. Simply, due to their nature and the differences they have with other types of financing, there was no body that regulated these companies in any way, until the AEMIP (Spanish Association of Microloans) was created.
Therefore, these types of loans do not have a specific law that regulates them, and they do not have the supervision of a State agency, such as the Bank of United States. However, some of these companies are directly supervised by the AEMIP and have a quality and safety seal guaranteed by this Association.
For now, we can distinguish legal loan entities from those that are not, if we follow a series of recommendations and tips to avoid scams in fast loans .
For what purpose was AEMIP created and what functions does it perform?
|CODE OF GOOD PRACTICES|
There are more and more companies dedicated to granting microloans. For this reason, and due to the need to regulate this activity, to guarantee the security of the clients, the Spanish Association of Microloans was created .
This non-profit association is in charge of imposing certain standards in this market, protecting users of microloans and, at the same time, improving the image of companies in this sector. The AEMIP has different aspects that are important to highlight.
Good practice code
The association has a Code of Good Practices that anyone can download and read on its website, and that all associated and adhered companies must comply with. Among other things, this code specifies aspects such as that all registered companies must comply with current Spanish legislation.
On the other hand, the companies registered in the association will have to fulfill their obligations in an honest, efficient, responsible and ethical manner. Carrying out transparent and truthful advertising, and using clear language in your communications with customers.
In addition, both its workers and affiliates must know the AEMIP code of good practices and comply with it to guarantee the safety of customers.
Therefore, the code has a list of norms that specifically regulate the companies that are associated or adhered to the association. Thanks to this code of good practices, the AEMIP entities have a quality seal, which protects the security of the users of their credits.
But the application of this code is not the only objective that AEMIP has.
The AEMIP has a self - protection file that the clients of the companies that belong to this association can use. This file is intended to protect us from excessive indebtedness due to the request for microcredits.
For this reason, if we want to appear for the Association as individuals who are not suitable for obtaining microloans, we can use the application form and become part of this file, in order to avoid over-indebtedness.
Once we are registered in the protection file, this request will have an effect of two years. Also, we can unsubscribe whenever we want if we want to be able to access financing from associated entities again.
This association has other functions. Among them are the following:
- Represent the interests of the members of the association.
- Offer its associates different training, advisory or technical assistance services.
- Promote good relations between members and clients, society or other financial entities.
- Promote greater protection of customers through the Code of Good Practices.
As we have seen, the Spanish Association of Microloans fulfills many functions that guarantee, both the good image of the registered companies, and the security of the clients through good practices in the sector.
Are changes expected in the regulation of fast loans?
There is no doubt that, despite the existence of the AEMIP figure, it is necessary to create specific rules in the legislation to regulate mini-loans. For this reason, in 2017 the approval of a bill was passed in Congress, which would regulate the entities that the Bank of United States does not supervise.
It is expected that , throughout 2019, these specific regulations that the State will carry out on short-term loans will see the light . This would be excellent news, both for entities and users.
This will prevent the proliferation of scams in this sector, which only tarnish the reputation and create mistrust. In addition, the user will be protected , who is sometimes very vulnerable to fraud when he needs financing.