Come Christmas time and the shopping streets in Valletta or Sliema start bustling with excitement, as Maltese families finalise their Christmas shopping. We all like to treat our loved ones, even if we sometimes feel the pinch of high prices.
Would you take a credit loan to wrap up your Christmas shopping? Please stop and think before you act. Taking out a credit loan is not a decision to be made lightly. Loans always come at a cost and prior to signing an agreement, you should know precisely the ins and outs of the commitment you consider making.
So, how aware are Maltese citizens of their rights? A survey conducted in 2013 indicated that only one third of the Maltese population feel informed about their credit rights, while 60 per cent believe that it is difficult and time consuming to compare credit offers. Another 40 per cent did not feel confident enough to choose financial products that best suited their needs and financial conditions.
To improve the situation, the European Commission and the Maltese Minister of Finance have launched an awareness-raising campaign to help consumers find out about their major credit rights, as laid out in the Consumer Credit Directive, and be confident about using them.
The CCD applies to credit loans ranging between €200 and €75,000, which are taken out for private purchases, excluding mortgage credit.
Under the CCD, your interests as consumers are protected every step of way: before you sign, when you sign and after you have signed.
First of all, you have the right to transparent credit advertising. All adverts concerning credit that states the interest rate or cost of the credit must contain information to help you compare the offer with that of other providers’ offers and shop around for the best deal.
So, on top of mentioning the interest rate, the advert also has to specify the typical duration of the credit agreement for a given credit product, or the number of instalments to enable you to reimburse the loan.
Are you one step closer to picking a specific type of credit? Use your right to clear pre-contractual information and request from credit providers that they spell out the nature and the terms and conditions of the product you have chosen, well before you sign the credit agreement.
The provided information will include the type of credit (credit card, personal loan, and so on), its total amount, the duration of the agreement, the borrowing rate and its terms and conditions, the annual percentage rate of charge (APR), the amount to be reimbursed per instalment, as well as the number of instalments and the repayment schedule.
You can also ask for the information to appear in a standardised format, called the Standard European Consumer Credit Information form (SECCI). This will enable you to carry on shopping for better deals and compare all offers from different providers on the same standardised basis.
You have the right to clear information in the contract. It is important that you understand the possible consequences of taking out a loan before you sign the agreement.
The credit agreement you will sign must be drafted in a clear and concise language to avoid any misunderstanding. It also has to specify the type of credit you are signing for, the amount of the loan you take out, the annual percentage rate and the total amount you owe. Remember that you also have the right to receive a copy of the loan agreement you have signed.
The better European citizens are aware and understand their consumer rights, the more they will be able to make full use of these rights in their personal lives
What happens if one week after signing the agreement you decide to cancel it? This is legally permissible. You are entitled to a 14-day cooling off period after signing, during which you have the right to withdraw from the agreement without justification.
Bear in mind, however, that you will have to reimburse the money you borrowed plus interests, and will need reimbursing any non-returnable charges already paid by the credit provider.
Finally, you have the right to repay your credit earlier than stated in the agreement. You may, however, have to compensate the credit provider for the lost income, if the amount you refund exceeds €10,000 within 12 months.
That said the compensation will not exceed one per cent of the amount repaid earlier.
In case you do not see eye-to-eye with your credit provider and end up in a dispute (e.g. over the right to pull out of an agreement), there is no need to engage immediately into lengthy and costly court proceedings. You can benefit from free-of-charge services from the Malta Financial Services Authority (MFSA) with whom you can file a complaint.
For more information about the Consumer Credit Campaign, I invite you to visit the campaign’s website at http://ec.europa.eu/consumers/citizen/my_rights/consumer-credit/national-campaigns/malta_mt.htm .
I wish all Maltese citizens a happy holiday season!
Neven Mimica is the EU Commissioner for Consumer Policy.