The Regulation Amending the Consumer Loan Agreements Regulation, published in the Official Gazette on September 23, 2022, introduces significant changes to the obligations of loan providers and, if available, loan intermediaries.
Significant changes to the obligations of loan providers and, if available, loan intermediaries
- In cases where insured and uninsured loans are offered, instead of sample payment plans for both offers, a comparative statement regarding the installment and the total repayment amount should be presented.
- When insured and uninsured loans are offered, information about the names and durations of loan-linked insurance must be provided, as well as whether the insurance is renewable or not.
- Moreover, for a loan provider to offer a loan contract that includes obtaining loan-linked insurance, subject to offering an insurance-free contract to the consumer, a pre-contractual information form and a Consumer Loan Choice Form must be prepared in at least fourteen-point size, including the consumer's choice and approval regarding insurance, and provided to the consumer in writing on paper or via a permanent data controller.
- Additionally, the content of certain fixed-term consumer loan agreements must include information about the names and durations of loan-linked insurance in case the insured loan offer is chosen and accepted by the consumer.
Changes regarding interest rate adjustments
Under the previous regulation, in the case of adjustments to the contractual interest rate in indefinite-term loan contracts, the consumer had to be informed in writing on paper or via a permanent data controller at least thirty days before the changes took effect. With the new amendment, this obligation has been updated to only apply to situations where the contractual interest rate is increased. If the interest rate is decreased, the change will take effect from the last payment due date of the period in which the notification was made.
The regulation introduces a provision stating that the consumer can exercise the right to cancel without notification if the entire loan debt is repaid during the cooling-off period. Under the regulation, ancillary financial products and services are defined as all kinds of products or services offered to the consumer, excluding interest, profit share, taxes, funds, and similar legal expenses within the scope of the consumer loan agreement. It is explicitly stated that consumer loan agreements cannot be linked to the purchase of ancillary financial products and services, except for loan-linked insurance.
- A loan provider may offer a loan contract that includes obtaining loan-linked insurance, on the condition that offering an insurance-free contract to the consumer.
- Loan-linked insurance must be in line with the subject of the loan. Multiple insurances providing the same coverage for the loan cannot be obtained. It is prohibited to take out insurance exceeding the loan amount.
- A consumer loan agreement cannot be tied to the purchase of ancillary financial products and services, except those related to the loan.
The obligation to inform will come into effect on January 1, 2023, while the other changes will be effective on October 1, 2022.