New Pawnshop Act comes into force on July 1
The new Dutch Pawnshop Act has entered into force today, which means stricter rules now apply to pawn loans. These rules apply to both commercial and municipal pawnshops, but also to other lenders, such as jewelers that give pawn loans on jewelry. One of the changes is the introduction of a ceiling on the interest rates that consumers have to pay on pawn loans. These rules are aimed at protecting consumers. Anita Vegter, Member of the Board of the Netherlands Authority for Consumers & Markets (ACM), explains: “The new Pawnshop Act protects consumers against very high interest rates or unclear contracts.”
New rules for pawn loans
Starting today, a maximum interest rate of 9 percent per month will apply to pawn loans. From July 1, 2015, this maximum will become 4.5 percent per month. These interest fees need to cover all the costs.
Additionally, pawn loans must have a minimum loan term of two months, during which a consumer has the right to reclaim the collateral. If an agreed loan term cannot be extended, consumers must be informed about this (and any other condition) in advance. Under the new rules, the collection of the loan and the interest is only allowed at the end of the loan term – that is, when the item is reclaimed. In the past, interest often already had to be paid during the loan term. In addition, the pawn contracts must comply with other requirements laid down in the act. For example, the contracts must include the information that consumers need for knowing what amounts they have to pay, and when.
In the run-up to the new Pawnshop Act, ACM informed businesses in the pawn sector about the new act. As of today, ACM enforces compliance with the regulations.
Consumers can submit indications to ACM’s consumer information portal ConsuWijzer.nl