• As of 1 July, the provisions of the economic shield that greatly restricted the non-interest costs of consumer loans are no longer in effect.
• Now loans, especially instant loans, can be up to five times more expensive - you should calculate the costs before you sign a contract.
• Also beware of the fees charged when you defer repayment of the loan.

For the past 15 months - thanks to the proposals of the President of UOKiK for the anti-crisis shield - consumers have been able to take out much cheaper loans. The total amount of non-interest costs, i.e. all fees and commissions associated with preparing the agreement, checking the consumer's creditworthiness, insurance, servicing the account, etc., was significantly reduced. For loans of up to 30 days, or  instant loans, the lender could not charge non-interest costs of more than 5% of the financing amount provided. For longer contracts, the maximum non-interest costs represented 15% of the borrowed amount (regardless of the loan term) plus 6% for each year of the loan, however, not more than 45%. Those provisions expired on 30 June this year.

- The solution came from shutting down the economy during the pandemic. With it, those who needed additional financial means in the most difficult period of the pandemic had a chance to get back on their feet, breathe financially, without falling into a spiral of debt - says Tomasz Chróstny, the President of UOKiK.

What are the current eligible costs of consumer credit?

Effective from 1 July, the limits on maximum non-interest costs returned to their previous level under the Consumer Credit Act. They depend on the length of the loan term. They can reach a maximum of 25% of the borrowed amount plus 30% for each year of the loan, however, not more than 100% of the loan. For example, when borrowing PLN 1,000 for 12 months, the maximum non-interest costs may amount to PLN 550. On top of that, of course, there is interest, but at current interest rates it is a much smaller burden on the consumer. Their maximum amount is related to the NBP (National Bank of Poland) reference rate and it is currently 7.2% per year. This means that if a consumer borrows PLN 1,000 for a year, after a year they have to pay no more than PLN 72 of interest.

How does the maximum cost of borrowing under current law differ from that under the shield? We have presented the differences in the table below with specific examples.

Dear Consumer, if you took out a loan before 1 July but the contract is still effective, you need to be aware that the entrepreneur may increase fees, but only for the duration of the remaining loan term. However, if they did not notify the consumer of that fact, or there are new charges that were not included in the contract, get free legal advice from consumer obmudsmen to find out what action you can take.

-I encourage consumers to carefully analyse the costs and terms of loans, compare offers from different financial institutions, and choose the most advantageous ones, taking into account all fees and commissions that accompany the financial service. If you notice irregularities, I encourage you to use free assistance of the financial ombudsman and consumer ombudsmen, as well as to file a complaint with UOKiK. At the same time, we continue to monitor whether financial institutions exceed the maximum non-interest costs permitted by law. If we suspect that this is the case, we intervene to eliminate unlawful practices as soon as possible - says Tomasz Chróstny, President of UOKiK.

Example. UOKiK received a complaint about a loan company which, while providing financing, allegedly inflated non-interest costs, as well as it extorted an additional insurance contract, so that the customer who received the loan of PLN 2,000 over the course of three years is supposed to return PLN 8,000 to the lender, which is four times as much as the original amount.

UOKiK have recently investigated further cases involving possible violations of the COVID regulation's restrictions on non-interest credit costs. In three such cases, after our intervention, the loan companies stopped that type of practice. In the case of other entrepreneurs who have not complied with the regulations, we conduct formal proceedings that may result in the imposition of financial penalties by the President of UOKiK.

When you are unable to repay your loan on time...

Dear Consumer, if you are not able to repay your loan on time, you have several options. Calculate the costs for each of them and think it over whether you will be able to meet them (regardless of the need to repay the initial amount); find out if you need to meet any additional conditions (e.g. the surety provided by another person). Be careful not to fall into a spiral of debt.

1. You can ask the financial institution to postpone repayment for a few days, weeks or months. This will ensure that you are not listed in the BIK (Credit Reference Agency) and that debt collection does not occur. Such operations are even possible several times, but lenders charge fees on them, which in total cannot exceed 25% of the amount borrowed. They must also stay within the limit of the eligible non-interest costs. Keep in mind that as of 1 July, the limit is back to the level it was before the shield regulations were introduced, so it may be higher than it was when you took out the loan.

Beware of promotions where the financial institution offers free deferred repayment. This is usually an exception, not a rule - such a "promotion" may apply, for example, only to the first 3-day postponement or only to a certain small amount.

2. Entrepreneurs also sometimes suggest taking out a new loan to pay off a previous one. The lender must then include in the non-interest cost limit both the costs it charged on the previous loan and those charged for providing the loan to refinance the previous loan. When several such refinance loans are made consecutively within 120 days of the disbursement date of the first loan, the cost limit must include the sum of the non-interest costs of all loans made to the consumer during that period.

In some cases, businesses may recommend a consumer to take out a new loan to pay off a previous loan with another company. Here, however, you must be careful! Some companies try to circumvent the regulations and roll the loans alternately across several entities. The scenario is that a loan from one company refinances a loan from another, with all of these entrepreneurs operating in an organised fashion within a single network and passing on customers who have gotten into financial trouble. The UOKiK received complaints about such practices for example against Szybka Gotówka, Gwarant24 and Centrum Rozwiązań Kredytowych, and those companies have just been charged by the President of UOKiK with violating the collective interests of consumers.

3. Instead of deferring repayment, you may also be offered a loan consolidation, in which case you will have one loan to pay off instead of several ones. On the surface, this is an enticing offer. However, compare the terms and costs of such consolidation - how your debt, costs and instalments will change. It often happens that another loan is offered under the guise of consolidation, which results in the increase in the debt and loan instalment. Here again, you need to be very careful of possible additional sureties.

Example. An advisor at the bank persuaded a consumer who came to unlock access to her account to take out a consolidation loan. He did not explain the rules of the loan to her nor was she informed that she had the right to cancel the contract within 14 days. Before the operation, the consumer's debt was PLN 47,500. After consolidation, the woman has to repay PLN 120,000.

Dear Consumer, do you want to take out a loan? Check:

• Whether the lending company or credit agent is listed in the register of the Financial Supervision Authority (Komisja Nadzoru Finansowego, KNF).
• What is the annual percentage rate (APR), or the cost of credit, expressed as a percentage of the amount we borrow? This makes it easier to compare offers.
• What are the total non-interest costs resulting from fees and commissions? Do they not exceed the statutory limits?
• Information form - you must get one from each lender before you enter into a contract. There you will find data about the cost of the commitment and the fees charged.

Remember that you can cancel your consumer credit agreement within 14 days. In such a situation, you are required to pay back interest for the time the money was in your account.

Consumer assistance:

Tel. 801 440 220 or 22 290 89 16 – consumer helpline
E-mail: porady@dlakonsumentow.pl
Consumer right advisers – in your town or district

Additional information for the media:

UOKiK Press Office
Pl. Powstańców Warszawy 1, 00-950 Warszawa, Poland
Phone +48 695 902 088, +48 22 55 60 246
E-mail: biuroprasowe@uokik.gov.pl
Twitter: @UOKiKgovPL