Online credit granting with new EU rules since Sunday (11/19/2023)

22 November 2023, 7:17

Since Sunday (November 19, 2023), the European Union (EU) has had new rules on consumer credit to ensure that consumers are informed and can repay these loans, aiming to avoid excessive charges and over-indebtedness.

“From now on, consumers who finance their projects and goods through credit will be more aware of the costs they face and better protected against the risks of new forms of credit made available online, such as 'buy now, pay later' schemes. ”, indicates the community executive in a statement.

Noting the entry into force on Sunday of the new rules, which will now have to be transposed by EU Member States into national law by 20 November 2025, the European Commission points out that, “regardless of whether consumers are renting a car, financing their online purchases, their holidays or projects related to home renovation work, with the new legislation it is less likely that they will end up over-indebted”.

At a time of high interest rates and a decline in purchasing power due to tight monetary policy, created to deal with high inflation, the EU will then have a new directive on consumer credit, which guarantees that information such as the cost credit totals are presented in a clear and understandable way, which imposes stricter rules on advertising to avoid excessive charges and which requires lenders to assess whether consumers can repay their credit in order to protect them from over-indebtedness .

Furthermore, it gives consumers the right to terminate a credit agreement within 14 days and gives cancer survivors the right to be forgotten.

Quoted in the released note, the vice-president for Values and Transparency, Vera Jourová, points out that, “if the credit costs are excessive, their conditions are unclear or their consequences are not carefully evaluated, the credit becomes a risk”, so the new directive aims to “make it easier for consumers to avoid these risks and stay safe”.

The European Commissioner responsible for the protection of Justice and Consumers, Didier Reynders, highlights the “new ways of disseminating information digitally and assessing the creditworthiness of consumers”, aiming to give credit provided via the internet “the same protection as the types of traditional loans.”

Consumer credits are loans for the purchase of consumer goods and services, and are often used to, for example, pay for cars, household items and appliances, and travel.