What are the new limits on consumer loan costs?
The most significant change introduced by Law 5317/2026 is the imposition of a maximum total cost of credit. This ceiling encompasses all financial burdens, including interest rates, commissions, and any additional expenses incurred by the borrower. The regulatory framework links the maximum allowable cost directly to the duration of the loan agreement.
Breakdown of cost ceilings by loan duration
To ensure clarity for prospective borrowers, the law establishes a tiered structure for maximum costs relative to the principal amount. According to the new regulations, the cost limits are categorized as follows:
- Up to four years: The total cost cannot exceed 60% of the principal amount.
- Between four and eight years: The total cost is capped at 70% of the principal.
- Over eight years: The total cost is limited to 75% of the principal.
For example, if a consumer takes out a loan of €10,000, the maximum additional cost they would be required to pay is €6,000 for a short-term loan (up to 4 years), €7,000 for a medium-term loan (4–8 years), and €7,500 for a long-term loan (over 8 years). It is important to note that credit cards are specifically excluded from these total cost ceilings.
Furthermore, the law introduces a cap on the annual percentage rate of charge (APR). This cap is determined by taking the average interest rate for similar credits published by the Bank of Greece and increasing it by a margin of between 30% and 50%.
How will transparency and information disclosure change?
Mandatory standardized documentation is now required to ensure borrowers understand the true cost of their financing before signing any contract. Previously, the quality of pre-contractual information often depended on the individual discretion and goodwill of bank employees. Under the new framework, the delivery of this information becomes a legal obligation.
Lenders must now provide a standardized information document, typically spanning two to three pages. This document is designed to strip away complexity and present the essential financial facts in a clear, comparable format. The document must explicitly detail:
- The total principal amount to be borrowed.
- The duration of the loan agreement.
- The specific installment amount (monthly payment).
- The interest rate applied.
- The Annual Percentage Rate of Charge (APR).
- The total amount to be repaid by the consumer.
If this information is provided to the consumer less than one day before the signing of the contract, lenders are also required to provide a subsequent reminder regarding the consumer's right of withdrawal. The primary objective is to shift the focus from simply asking "how much is the monthly installment?" to "how much will I repay in total?"
What is the 14-day right of withdrawal?
Consumers are granted a statutory right to withdraw from a loan agreement within 14 calendar days without needing to provide any justification for their decision. This "cooling-off period" is intended to give borrowers sufficient time to reconsider their financial commitments after reviewing the standardized information provided by the lender.
However, the exercise of this right involves specific financial responsibilities. If the loan funds have already been disbursed (drawn down), the borrower is required to return the principal amount along with the interest accrued for the period the funds were in their possession. This repayment must be completed no later than 30 days after the borrower has formally notified the lender of their intention to withdraw.
How will creditworthiness assessments be conducted?
The new regulations reinforce the necessity of rigorous creditworthiness assessments to protect both the consumer and the financial system. Lenders are legally obligated to evaluate the financial stability of a potential borrower by analyzing their income, existing expenses, and other outstanding financial obligations.
The central focus of this assessment is the borrower's actual capacity to service the loan installments without falling into financial distress. While digital applications have made the borrowing process faster and more convenient, the law clarifies that ease of access does not exempt credit providers from their duty to perform a thorough investigation of the applicant's financial data. A superficial digital check is no longer sufficient to meet the legal standard of due diligence.
Will these changes affect existing loans?
The new cost ceilings and regulatory requirements do not apply retroactively to loans that were signed before the implementation date. Contracts that are already in force at the time of the transition to the new legal framework will remain governed by the previous regulations until they are fully repaid or terminated.
This means that borrowers with current consumer loans will continue to pay the interest rates and fees agreed upon in their original contracts. The protections offered by Law 5317/2026 are designed specifically for new contracts entered into on or after November 20, 2026.
Key takeaways
- New consumer loan cost ceilings take effect on November 20, 2026, under Law 5317/2026.
- Maximum costs range from 60% to 75% of the principal depending on loan duration.
- Credit cards are exempt from the new total cost of credit caps.
- Lenders must provide a standardized 2–3 page document detailing all loan costs.
- Borrowers have a 14-day period to withdraw from a loan without justification.
- Lenders must perform strict creditworthiness checks regardless of digital application ease.
FAQ: Consumer Loan Changes
What is the maximum cost for a €10,000 loan over five years?
For a €10,000 loan with a duration between four and eight years, the maximum total cost allowed is €7,000. This figure includes all interest, commissions, and additional expenses associated with the credit agreement under the new law.
Are credit cards included in the new cost limits?
No, credit cards are specifically excluded from the new total cost of credit ceilings. The caps established by Law 5317/2026 apply to consumer loans but do not extend to the financing costs associated with credit card usage.
Can I cancel my loan after signing it?
Yes, you have a legal right to withdraw from the loan agreement within 14 calendar days without providing a reason. If you have already used the funds, you must repay the principal plus interest within 30 days of notification.
How is the interest rate cap determined?
The interest rate cap is calculated based on the average interest rates for similar loans published by the Bank of Greece. This average is then increased by a margin of 30% to 50% to set the maximum allowable APR.
Do these rules apply to my current loan?
No, the new regulations do not apply retroactively. Any loan contracts that were already active before November 20, 2026, will continue to follow the rules and interest rates established in their original agreements until they are settled.
Conclusion
The implementation of Law 5317/2026 marks a significant shift in the consumer credit landscape, moving toward greater transparency and cost control. By capping the total cost of borrowing based on loan duration and mandating standardized disclosures, the regulation aims to prevent predatory lending and ensure borrowers are fully aware of their long-term financial obligations. While existing loans remain unaffected, all new borrowers entering the market after November 20, 2026, will benefit from enhanced protections, including a clear right of withdrawal and more rigorous creditworthiness assessments by lenders.
