The maximum interest rate for consumer loans will be lowered for 2025. The maximum rate for cash loans will be set at 11 percent (down from the current 12 percent), while the rate for overdraft credits and credit cards will be reduced to 13 percent (from 14 percent). This was announced by the Department of Justice and Police (EJPD) on Thursday.

Reason for the Adjustments: Falling Interest Rates

The adjustments are due to the declining interest rate environment. For 2024, both rates had been increased by one percentage point each because of rising interest rates.

Saron Determines the Level

This step is based on the calculation formula established in the Ordinance on the Consumer Credit Act (VKKG). According to the EJPD, the review revealed a need for adjustment due to the renewed decline in interest rates. The three-month compounded Saron rate serves as the basis for the calculation.

The maximum interest rates are indefinite and are reviewed annually at the end of August. As of that date, the relevant reference interest rate, SAR3MC, stood at 1,26 percent.

Consumer Protection

The maximum interest rate is intended to protect consumers from excessive interest rates. Loan agreements with excessive interest rates are invalid under the Consumer Credit Act. In such cases, consumers are only obligated to repay the loan amount, not the interest or associated costs.