Domia Global 2023 - Tots els drets reservats
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The state of alarm resulting from the pandemic caused by Covid-19 has made the Supreme Court Judgment of March 4, 2020, which recognizes the abuse of interest on revolving loans, go completely unnoticed.
These types of “revolving” loans (which usually come from the contracting of cards with the same name) are a product that financial institutions offer to customers and which have the particularity that the holder can split or defer the creditthat has been used.
In fact, this deferral of payment becomes a trap that, through abusive interest, leaves the debtor in a situation of permanent indebtedness.
The circumstances in which this type of credit is signed must be borne in mind, as stated in the sentence: firstly, the public to which they are intended, which are usually private individuals who, for various reasons, do not have access to other less onerous types of credit.
Secondly, the very peculiarities of credit: the monetary limit that the client can have is constantly being regularized and this means that the interest and commissions that are generated are capitalized again to generate a new interest.
Finally, it should be borne in mind that the amounts of the installments are not usually very high, compared to the outstanding debt, but they extend a lot over time and this generates new interest until it enters a spiral of non-return.
The Judgment refers to the concept of “normal interest on money” as a scale for determining whether this interest charged on this type of credit is abusive. In addition, it also says that setting an interest rate well above normal cannot be justifiedin any way with regard to the high default rate that generates this type of credit.
The ruling argues that in no case the irresponsible granting of consumer loans with much higher interest rates than normal, has as a direct consequence, the over-indebtedness of consumers and, therefore, this unethical attitude of creditors in no case can have the protection of the legal system.