The Supreme Court applies the usury criterion to personal loans for 'revolving' cards

BarcelonaThe Supreme Court has extended to personal loans the usury criteria it already applies to so-called revolving cards, i.e., deferred payment cards. Thus, the high court establishes that there is usury if the interest applied to a personal loan exceeds by more than six points the average interest published by the Bank of Spain. In a ruling dated March 9, the civil chamber of the Supreme Court upholds the appeal filed against a ruling of June 2022 by the Provincial Court of Seville.

This is the case of an individual who in 2019 took out a loan policy with the entity Younited for an amount of 10,500 euros, with the obligation to pay 48 monthly installments of 273.35 euros, so that the total to be paid amounted to 13,120.80 euros. The loan included management fees of 761.25 euros, which were deducted from the principal lent. Therefore, the APR (annual percentage rate) set in the contract was 16.61%.

The client, who requested the loan to consolidate debts, claimed in court that the contract be declared null and void for being usurious. Although he was initially successful, the Provincial Court ruled in favor of the lending entity and considered that the APR applied (16.78%) did not exceed double the officially set index (between 9.63% and 8.11%), and "it had not been proven that it was different from that of other operations carried out".

The Supreme Court, on the other hand, considers that to assess whether the agreed interest is notably higher than the normal interest rate for money, it must be taken into account that the agreed interest is not so much the nominal interest as the annual percentage rate (APR).

The Supreme Court takes into account the statistics published by the Bank of Spain, taking as a basis the information that credit institutions must provide monthly on the interest rates they apply to various types of operations. In this case, the ruling indicates, it is not disputed that the APR set in the contract is 16.61%, but, according to the aforementioned statistics published by the Bank of Spain, at the time of signing, the average interest rate being applied to personal loans of between 1 and 5 years was 8.10%.

When the agreed interest exceeds 6 percentage points, the Supreme Court points out, it must be considered "notably high and, therefore, usurious". The consumer association Asufín welcomes that the high court has extended to the realm of personal loans the criterion of 6 points above to set the normal interest rate for money, already established with revolving or deferred payment cards, reports Efe.