The effective costs of a provider of a consumer loan

27.07.2020

In compliance with the stable practice of the Czech courts and the opinion of the Czech National Bank, it follows that the effective costs of a provider of a loan for premature repayment of a consumer loan, are only the legitimate direct costs customary at the specific time and place, expended by the provider in connection to the prematurely repaid loan, which fulfil their main purpose, i.e. repayment of the loan, are subsequently duly entered to the provider’s accounts and do not lead to its increased enrichment. With regard to the fact that it is a right to prematurely repay a loan, effective costs may not include amounts that are intended to cover any damages or lost profits on the part of the provider, or costs that originated in relation to actual provision of the loan itself.

The general principles during assessment of effective costs can also be derived from the above, i.e. particularly the principles for preventing enrichment, due accounting and customariness at the specific time and place.

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