In September 2019, the EU Court of Justice issued a judgment on bank returns, which caused us to look at the total cost of loans, including commission on loans, and the conditions for their repayment.
Most consumers are not aware that this judgment gave them the opportunity to recover even several thousand USD. That is why in the further part of the article we explain what the loan commission is, what its allowable amount is and when the consumer can apply for its return.
What costs are associated with signing the loan agreement?
The cost of the loan consists of interest costs and non-interest costs. The maximum amount of interest is set out in Art. 359 of the Civil Code (i.e. of May 16, 2019, Journal of Laws, item 1145) and may not be more than twice the statutory interest.
Statutory interest is added to the indicator, i.e. the NBP reference rate, 3.5 points. rates. The reference rate is currently 1.5%. This means that the interest on the loan cannot be higher than 10%, according to the formula: 2 × (1.5% + 3.5%) = 10% .
Non-interest costs, i.e. what additional costs can the bank charge to the consumer?
You are certainly aware that the cost of credit significantly exceeds the amount of interest. The bank may also charge the consumer with non-interest costs. We include, among others:
- insurance costs.
Notary fees are not included in the cost of the loan
Definition and types of loan commission
No law tell you directly what a loan commission is. However, it is usually assumed that this is a fee to compensate the bank for costs associated with :
- granting a loan,
- loss of interest in the event of early repayment by the consumer,
- examination of the loan application.
According to the above-mentioned situations, three types of commission are also distinguished, with the commission for examining the loan application – identified with the preparation fee and paid by the client before granting the loan decision – is becoming less common.
Maximum commission amount – what can you expect from the bank?
The sum of non-interest costs, i.e. all costs except interest and notary fees, may not be higher than the amount you will calculate in accordance with the formula in art. 36a section 1 of the Consumer Credit Act (i.e. of 16 May 2019, Journal of Laws, item 1083).
This formula is as follows:
(total loan amount x 25%) + [total loan amount x (repayment period in days / number of days in the year) x 30%].
For example: suppose the consumer takes a loan of USD 10,000 per year. Then, non-interest costs, including the amount of commission on the loan, cannot be higher than USD 5,500 , as calculated by:
(10,000 x 25%) + [10,000 x (365/365) x 30%] = 5,500
Note that the amount calculated includes all non-interest loan costs that the bank may include, including loan commission. This means that the commission cannot be higher than the amount calculated according to the formula.
The legislator introduced one more restriction on non-interest costs. In accordance with art. 36a section 2 of the Consumer Credit Act, they cannot be higher than the total loan amount.