When the new Dutch Pawnshop Act comes into force, new regulations will apply to pawn loans. From 1 July 2014, a ceiling will be introduced on the interest rate that consumers have to pay on pawn loans. From this date, a maximum interest rate of 9 percent per month will apply to pawn loans. From 1 July 2015, this maximum will be 4.5 percent per month. These rules apply to all pawn loans, both for pawnshops and other lenders, like jewellers. In addition, from 1 July 2014, the regulations require that the duration of a pawn contract is at least two months. Consumers have the right to reclaim the collateral during this period. Finally, the new act also sets other requirements for pawn contracts.
What are pawns?
Consumers can take jewellery or other items to a pawnshop or jeweller, who will keep these items. In return, consumers receive a loan. If they want to reclaim their items, they have to repay the loan they received, plus an interest fee. This fee – also called the finance fee or pawn fee – is regulated by the new act.
ACM enforces compliance
From 1 July, the Netherlands Authority for Consumers and Markets (ACM) will enforce compliance with the new regulations. Anita Vegter, Member of the Board of ACM, explains: “The aim of the new Dutch Pawnshop Act is to protect pawnshop customers, who are often in a vulnerable position, from very high interest rates or unclear contracts.”
As of today, ACM will take an active role in informing pawnshops about the new regulations, so that they can make their preparations. Consumers will be informed through ACM’s consumer information portal ConsuWijzer.