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The Ministry of Justice told how the rules on the microcredit market will change from January 1, 2021. The changes are provided for by Law No. 891, Payday Loans Online California, which was adopted in connection with the rapid growth in demand for microcredit, as well as the need to ration this area because recently more and more citizens have had many problems due to the fact that the requirements for disclosure of information did not apply to the so-called microcredits.

1. Limitation of the number of fines and penalties

Loan agreements, which are concluded for up to one month, and agreements, the total loan amount for which does not exceed one minimum wage will relate to consumer loans, and therefore such relations will be governed by the norms of the Law of Ukraine "On Consumer Lending".

The maximum aggregate amount of fines and penalties for violation by the consumer of fulfilling his obligations on the basis of a consumer loan agreement, the total loan amount for which does not exceed the minimum wage, cannot exceed the double amount received by the consumer under such an agreement, and cannot be increased by agreement parties.

2. Prohibition of interest rate changes

It is extremely important for consumers of microcredits to consolidate at the legislative level a ban on changing the interest rate on a loan, the procedure for calculating it, and the procedure for paying interest in the direction of worsening conditions for the consumer. Since a very common problem is a lack of understanding of the full cost of a loan and sanctions in case of delay, which could triple or even increase a person's debt tenfold and, Best Payday Loans California, as a result, a person cannot return it.

3. About credit history

From now on, a prerequisite for concluding a consumer loan agreement is the consumer's consent to access his credit history and to collect, store, use and distribute information about him and this loan through the credit history bureaus included in the Unified Register of Credit Bureaus. If the consumer does not provide such consent, the lender must refuse to conclude an agreement and carry out a credit operation.

Another innovation is the establishment of the obligation for the lender to transfer free-of-charge information on all consumer loans to at least one credit bureau included in the Unified Register of Credit Bureaus.

The next innovation is the reduction of the term for the credit bureau to enter the information received from the lender. Previously, the legislation provided for seven days for this procedure, but now this period is limited to two days.

4. Limitation on the number of "quick loans"

The law restricts the ability to receive an unlimited number of quick loans without the intention of repaying them while protecting financial institutions from an increase in problem debts.

Therefore, Online Payday Loans California, it is likely that the interest of lenders in this type of lending will be significantly reduced due to the limitation of the possibility of calculating interest, fines, and penalties. But the changes will help to a certain extent to protect consumers from receiving, at first glance, insignificant loans, and will also allow clients to maintain their solvency.

5. About the risks of microcredit

Financial companies will not be required to provide customers with a consumer loan passport before signing the contract if it is a loan for an amount that does not exceed the minimum wage. Such an obligation is only for loans in excess of the minimum wage. The unsettledness of this issue leaves lenders the opportunity to use different methods of concealing information about the loan in the future.

That is why, in order to ensure the timely provision of complete, accurate, and reliable information about financial services, the National Bank of Ukraine announced the establishment of a requirement for financial companies to post essential characteristics of credit products (in particular, microcredits) on its websites.

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