In the context of the broad overhaul of consumer credit, the repayment period is reduced and framed for the revolving credit facility.
Initial finding on the repayment of revolving debt
The Government notes that the revolving debt repayments that are staggered on a long-term increase on the one hand the total amount of credit, and prevents other borrowers to settle their debts; the operation that feeds the storm of debt.
To protect the consumer, the law requires lenders to provide a minimum payment for each installment, so that the debtor is clearly informed of the amount to be repaid.
This Order is applied for all new revolving debt agreements after this date. For those who already have a revolving credit, a future decree will specify the terms of repayment. Because the government wants to avoid a sharp rise in monthly payments over that would put borrowers in insolvency.
You will pay your revolving debt in less time
The new repayment period is set as follows:
– Not more than 36 months (3 years) for revolving debts less than or equal to 3,000 $,
– Not more than 60 months (5 years) for revolving debts exceeding 3,000 $.
This duration is valid for both revolving credit agreements that provide for reimbursement rates for variables and that of loans with insurance (optional) purchased by the borrower and guaranteeing repayment.
Moreover, for revolving debts to variable rate repayment law requires lenders a percentage of minimum monthly repayment:
– 1% for revolving loans less than or equal to 3,000 $,
– 0.5 % for revolving debts exceeding 3,000 $
In the case where the refund is not calculated monthly, the lender determines a suitable minimum payout percentage.
In the event of financial difficulty, two annual reports will be awarded
Borrowers in temporary financial difficulty may be granted by the lenders a deferment, limited to twice per year. However, during this delay, the right to borrow the relevant consumer will be suspended until he repaid all maturities reported.