* Government wants to cap the cost of early loan repayments
* Bogdan Chiriţoiu of the Competition Council: "This measure will stimulate competition in the banking sector"
In order to avoid an increase in the number of overdue loans, the authorities yesterday approved an emergency ordinance concerning consumer loans, which allows borrowers to repay their loans before maturity, if they no longer agree with the terms of the contract, without being forced to pay oversized early repayment fees.
The emergency ordinance, eliminates the early repayment fee for variable interest rate loans. Within 90 days after the coming into effect of the bill, banks will be required to amend ongoing loan contracts to comply.
The decree provides the elimination of the early repayment fee, for variable interest loans, both for those with real estate collateral, as well as for those without this type of collateral, as well as the capping of loan commissions to 1% for fixed interest rate loans.
Moreover, customers will be able to terminate the loan agreement within 14 days.
"After the publication of this ordinance, any Romanian citizen that enters a loan agreement with a bank will have the option to cancel the contract within 14 days without having to provide any justification, meaning that they will be free to switch to banks that offers better lending terms", prime-minister Emil Boc said.
Customers that cancel the loan agreement within the established delays will no longer be required to pay the set-up fees. Moreover, under the provisions of the new bill, customers will receive a standard form which will allow them to carefully review all the costs of the loan.
Loan payments are becoming an increasingly heavy burden for borrowers who took out secured loans. The total amount of loan payments more than 30 days overdue stood at 3.99 billion lei
