Maximum Terms of Consumer Loans Increased
Banking & Finance
The Banking Regulatory and Supervisory Authority (“BRSA”) amended the Regulation on Credit Transactions of Banks and the Regulation on Establishment and Operation Principles of Financial Leasing, Factoring and Financing Companies (the “Amendment“). The Amendment entered into force upon its publication on the Official Gazette dated February 26, 2019 with No. 30698.
- The maximum term of consumer loans is increased to 60 months from 36 months, except for (i) loans for house purchase and renovation or financial leases related to housing; (ii) other real estate loans; (iii) loans to finance education and tuition fees; and (iv) loans to finance debts owed to public authorities and institutions, on the condition that the payment is directly made to the authorities or institutions’ account, as well as loans for the refinancing of the aforementioned debts.
- In addition, the Amendment increased the maximum term of consumer loans for computer purchases from six months to 12 months.
- While the maximum term for all car loans was 48 months, the Amendment made a differentiation based on car prices. Accordingly, the terms of consumer loans extended for the purchase of cars with a final sale price equal to or less than TRY 120,000 cannot exceed 60 months, whereas loans extended for the purchase of cars with a sale price more than TRY 120,000 cannot exceed 48 months.
- Furthermore, pursuant to the provisional article added by the Amendment, the debt balance of consumer loans extended before February 26, 2019 can be restructured to a maximum of 60 months at the borrower’s request.