Consumer credit

It should be said that the stakes are high. This market weighs 800 million euros. Two out of three Europeans resort to these credits. Within the European Union (EU), the rate of consumer credits varies from 6 % in Finland to 12 % in Portugal, and this is what has inspired the desire to harmonize consumer credit contracts at European level. As of now, the market exists mostly at a national level. Only less than 1% of the transactions are cross border, a figure that should increase with the opening of the market.

The principal objectives of the directive

To facilitate loans in other countries of the EU while protecting consumers against overindebtness.

A harmonization achieved in numerous domains:

•    the promotion and information given to consumers before signing the contract and at the time of its conclusion;
•    the calculation of the total cost of the loan;
•    the obligation of assessing the solvency;
•    the right to withdraw (14 days after having signed the contract);
•    the right to preempted reimbursement by the lender along with the precise rules of calculation of compensations that the client must pay

European consumers will dispose of the same information and will be subjected to the same norms, allowing them to compare more easily the offers within the European Union.

The scope of the field of application

The new legislation will cover consumer loans of an amount ranging from 200 to 75000 euros and reimbursable seaward of one month. Only the credit contracts imposing interests will be concerned. Conventional residential mortgages destined to acquire land or real assets will not be included but will be part of another guideline.

If the European Council of Ministers approves this text, the 27 member states will have two years to transpose the guideline.