Posted by on 18 Jun 2014. Filed under Current Affairs, Legislation, Top news. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry

Loan Sharks Can Swim Through New Law

The government recently passed legislation in an attempt to stop widespread usury practices, but it seems the loan sharks will be able to manoeuvre around the new law by disguising the interest as fees.

Ursury on the rise (c) The Daily.SK

You may have noticed the adverts while travelling on the bus. Immediate loans, just call this number, and the interest written almost invisibly small at the bottom. Thousands and thousands of percent interest. The government therefore tried to crack down on the practices by adopting a new law capping the level of interest that can be charged for lending money.

An article in daily SME today claims that the usurers can bypass the law by charging higher fees, while keeping within the confines of the law in respect of interest. The loophole comes from the inadequate preparation of the law, and means even loans with zero percent interest can charge huge fees, resulting in hundreds or thousands of percent per year. This kind of loan practice is already widespread in other countries anyway, offering 0% APR. The new Slovak law will take effect in September 2014.

1 Comment for “Loan Sharks Can Swim Through New Law”

  1. Dave C.

    Clearly if Govt. deputies spent less time in the bar and more time listening to expert advice they would not blindly vote for knee jerk, ineffective legislation.

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