Credit Refusal Rights

The situation is widely discussed in the media and in society – what if a customer is unable to repay the loan? There seems to be no way out, but it is not at all true – Latvian law is relatively favorable to those who want to cancel their ill-considered actions, and there is such a thing as the right to refuse credit.

How do I cancel my loan?

How do I cancel my loan?

Yes, it is possible, but it must be done quickly. First, under the PTAL, the consumer can exercise his right of withdrawal within 14 days . This means withdrawing from the consumer credit agreement without giving any reason. You should be aware that the withdrawal period is counted from the date of conclusion of the consumer credit agreement.

Otherwise, it is the number of days on which the consumer receives the information, terms and conditions of the consumer credit agreement. Of course, unless they are received after the date of the conclusion of the credit agreement, as prescribed.

How do I notify a creditor of my actions?

If you choose to foreclose, the consumer (that is, you) shall notify the lender in writing of the exercise of the right of withdrawal in accordance with the consumer credit agreement. It is important not to exceed the deadline – you can be sure that the deadline is met if the consumer sends a notice of exercise of the right of withdrawal to the creditor before the deadline. You can do so electronically or by post.

You can be safe – the Consumer Law states that if the consumer exercises his right of withdrawal, the creditor is not entitled to claim compensation from the consumer. So it doesn’t endanger you. It is true that a lender may claim compensation from you for the non-refundable costs incurred by the lender.

Does this also apply to short-term loans?

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In short, yes. It is even specifically stated in the CRPC – that small loans (meaning a term such as a short-term loan repayable by the service provider within 30 days) also have a right of withdrawal. However, you should be aware that you are required to reimburse the creditor and the accrued interest immediately, no later than 30 days after the notice of withdrawal is sent – otherwise you may be in a position to extend the repayment period.

If this happens, you know that you have to pay the loan interest for the entire duration of the loan. For the sake of clarity for both parties, it would be desirable to include in the contracts a provision which allows the service provider to calculate this interest on the loan.

Are there any exceptions to this?

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Yes, this right of withdrawal does not apply to consumer credit agreements:

  • concluded for the purchase of real estate,
  • secured by a real estate mortgage,
  • leases or leases which do not require the consumer to obtain the object of the contract,
  • those accepted without payment of interest and other additional payments,
  • and other exceptions.

What else do I need to know about credit denials?

You may request cancellation of the consumer credit agreement if you exercise the right of withdrawal. In such a case, payment for the good or service shall be made in whole or in part through a consumer credit agreement.

You also need to know that it is your responsibility as a consumer to pay interest and other charges only for the period up to the date of termination of your credit agreement, ie until the last day. It’s good to know your rights – a lender can’t ask you to pay a penalty. Nor can it claim damages for the cancellation of a consumer credit agreement.Lastly, always remember that you must return the product to the seller or service provider of the manufactured goods.