The state is taking decisive measures against incorrect practices in granting quick loans. A new draft of the Consumer Credit Act, which has already been submitted for public discussion by the outgoing cabinet, envisages the introduction of a strict ceiling on the increase in the cost of loans.
According to the new texts, which introduce a European directive, the maximum increase in the cost of a loan for a period of up to one month cannot exceed 20%. This means that if a consumer withdraws 100 leva, the amount to be returned cannot be more than 120 leva, regardless of fees and interest.
The changes aim to stop the vicious practice of taking out multiple loans, which leads to the bankruptcy of thousands of households. Data shows that every fourth Bulgarian has taken out a quick loan at least once, and the record is held by a man who managed to take out as many as 56 loans.
"People take out a quick loan for some reason and then pay an awful lot of money. This is robbery and a crime," say victims, quoted by BNT.
A key point in the bill is the obligation for a real assessment of creditworthiness. Quick loan companies will no longer be able to grant funds indiscriminately to people who clearly cannot repay them.
"If a person with ten quick loans already goes to withdraw the 11th, it should not be granted to him", categorically stated credit consultant Tihomir Toshev, quoted by BNT.
He explained that the new requirements oblige companies to clearly check what income the applicant receives and whether he regularly serves his current obligations. "From my experience, I can tell you that in 99% of cases, people who have more than 3 quick loans cannot service a fourth or fifth", adds Toshev.
Until now, the limit for the Annual Percentage Rate (APR) was around 67%, but through various legal and accounting loopholes, companies often reached an increase of up to 300%.
"The new law provides for this to fall to 50.75%", said Tihomir Toshev. For loans up to 3 months, the ceiling for price increases will be set at no more than 30%.
Attorney Bogomil Yordanov gave a specific example of the new protections: "If a person has withdrawn, for example, 5,000 leva, in 3 months it is prohibited to collect more than 30% - when we add them up, it is 6,500 leva, whatever penalties or other charges they may impose", he explained, quoted by BNT.
The bill also introduces a ban on certain types of aggressive advertising, as well as a requirement for clearer presentation of information to consumers. The goal is to end the practice of "fine print" and hidden clauses that often escape clients.
Attorney Yordanov warns that despite winning numerous cases against non-banking institutions, fear among people remains the leading factor.
"Many people, despite advising them to contact 112, the prosecutor's office, are scared and pay triple amounts, as if it's not 2025", the lawyer commented.
Despite optimism about the new regulations, experts remain vigilant as to whether unscrupulous companies will find new "loopholes" to circumvent the rules even after the changes are adopted.