Borrowers should not pay for changes in agreements with creditors
The Bank of Russia has revealed that some creditors try to attract clients by offering them to change loan or microloan agreement terms for a fee and thus creating a semblance of more advantageous terms. The regulator considers that such practices are unacceptable and are increasing the risk of misleading a borrower: individuals might find it difficult to understand and objectively assess the offers that might change the amount of their expenses.
Thus, a creditor might offer a future borrower to raise a loan or a microloan at a reduced interest rate for an additional fee, which actually means that the borrower will pay interest in advance. Another fee-based option allows a borrower to decrease the amount of a regular payment or choose another date in case the borrower’s wage unexpectedly declines or the wage payment schedule changes. If nothing of this happens, this would imply that consumers just wasted the money for a service that they actually do not need. For an additional fee, creditors might also offer to reduce the
Fee-based options might also include debt restructuring, the opportunities to skip a regular payment or get a partial refund for interest after debt repayment. A number of creditors might even sell their refusal to recover the outstanding debt if it arises, while this debt will still be recorded in the borrower’s credit history.
The Bank of Russia has sent a letter to creditors recommending that they should not use such practices as they might violate consumers’ rights.