The information has been retrieved on the loan providers’ pages on 2 September 2019. The comparison included the largest lenders, who reported both the lowest and highest annual interest rates on consumer credit. In many cases, the lower the interest rate, the higher the fixed costs.
To keep the comparison simple, opening fees, monthly fees, and credit modification plan fees were excluded from the comparison. For example, consumer loans offered by big banks have always had relatively moderate interest rates compared to other loan providers, but the arrangement and opening fees have often been higher. Now the big banks have had to adjust their payments to comply with the new law.
Banks and financial institutions are on the same line for pricing
The law forced lenders to lower interest rates and fixed fees. Because of interest rate caps, lenders are closer in price. In the future, lenders will need to be more careful about who they lend to, because lower interest rates on lower interest rate caps reduce the risk tolerance of the lender.
Several small lenders have disappeared from the market, leaving the market with the largest banks and financial institutions. By August, some lenders had already closed down. The importance of competitive tendering for the consumer is now increasing as several operators offer consumer credit in the same price range.
Benefits for consumers of a change in the law
Competition between lenders is increasing and interest rates on loans have fallen. Above all, this will benefit the consumer. On the other hand, lenders are choosing their customers more carefully, which makes it easier to get a loan. This is predicted to lead to more default payments for consumers who have financed loan payments with new consumer credit.
The new law does not apply to loans taken before September 1, 2019. It is worthwhile for the consumer to find out whether it is possible to replace the old credit with a new one with a lower interest rate cap. If this is not possible, it is no longer worthwhile to make new withdrawals from your old credit.
The purpose of the amendment is to make the pricing of consumer loans more affordable. The change introduced more reasonably priced consumer credit, which is much easier for the consumer to compare. The law will also facilitate law enforcement. Lenders who violate the new law are not entitled to charge any interest and credit costs to the consumer.
Pricing is estimated to be viable
Many lenders are currently closely following the market. Charles and Joseph Surface anticipates that prices will fluctuate during the fall. Comparison of loans on the basis of interest rates alone was facilitated by the amendment of the law.
On the other hand, lenders can provide loans with long loan periods, which increases the overall cost. In the long term, credit will always become more expensive, so it is advisable to reduce the credit as soon as possible.