While it seems logical and desirable to have a marginal rate to lend money, not all countries have one. In fact, only Colombia and Chile currently have a rate of usury by law. This percentage would be the interest we paid for 3 months on the money they lent us. This is clearly a rate that is higher than the rate of wear and tear. This is the reference interest rate for calculating usurious interest. The financial regulator certifies it every month and calculates it as follows: In 2021, due to the impact of the pandemic and to help citizens pay their financial obligations, this rate fell to its highest level in 10 years, ranging from 25.98% at the beginning of the year to 26.19%. Here we will explain what wear rate is, how wear is calculated and why it is important to know it. We`ll also show you how you can use this data to your advantage to get out of debt faster. What we recommend is not to fall into the hands of these people. And be sure to seek advice from lawyers who know the crime of usury in the Colombian Penal Code.
Anyone who purchases a cheque, salary, salary or social benefit under the conditions provided for in this article shall be punished by imprisonment for a term of 48 to 126 months and a fine of 133.33 to 600 of the applicable legal minimum wage. In addition to the approach, the exchange rate is also rising in anticipation of the US unemployment data to be released tomorrow, according to the institution, the new usurious rate represents an increase of 140 basis points (1.40%) compared to the previous period (31.92%). For this month, the current bank interest rates and usurious interest rate are: Pay your bonds. If you want to improve interest rates, you`d better consider buying a portfolio. These will always improve your interest rate. The rate of wear is always given in annual efficiency. To find out the monthly wear rate, you can follow our interest rate conversion guide or consult the table below: Knowing the wear rate allows us to manage our debts to look for better conditions. What we need is to review the evolution of the rate of wear and tear in recent months. Is it declining? Did it stay the same? Are things improving? For Alexander Ríos, financial expert and founder of Inverxia, long-term borrowing at high interest rates should be avoided when interest rates rise. “The recommendation is that if you use the credit card, you should check two things: first, that it offers points, miles or other benefits, because it will be a discount later. And secondly, finance in one or two installments, where the interest charge is not a large part of the purchase payment,” Rio said. The warning was known in the context of the Bank of the Republic which raised interest rates© (already at 10%) in order to curb private consumption, although this measure has not yet been reflected in households.
That is why citizens are so concerned about consumer credit©. Colombia`s financial regulator has announced the amount that will govern the usury rate from October 1 to 31. According to Decision No. 1327, this month has an annual effect of 36.92% on the modality of consumption and ordinary credit©, an increase of 167 basis points (1.67%) compared to the previous period, when it was 35.25%. BCI Empresas SAS charged interest in excess of 17 times the statutory interest allowed. The rate of wear and tear is a limit that the law prescribes for any cash loan or installment sale. According to article 305 of the Criminal Code, no person or entity may lend money above this rate. Below are graphs of wear rate values for the last four years.
Take information from all consumption, business, and credit card balances for the past 4 weeks. To this end, they consult, among others, banks, financial companies, finance companies and cooperatives. With this information, they determine an average of the effective annual rates that companies have calculated during that period. The Financial Supervisory Authority of Colombia has announced that the wear rate for the month of August 2022 will be 33.32%, which applies annually to the consumer and ordinary credit modality. If you are about to apply for a loan and want to know if the interest rate you want to apply is legal, you need to know what the usurious interest rate is in Colombia. This is a brand new type of loan that tries to combat got-by-drop. Therefore, so far, the average rate of small loans (up to 2 minimum wages) granted last year has been determined. Unlike previous loan types, only loans deferred up to 36 months are considered here. The government has changed the frequency of calculation of Colombia`s usury rate today.
The maximum allowable top-up for credit cards and consumer cards is certified monthly (previously quarterly). In the first case, we must ensure the periodicity of the sentence. That is, if this percentage is calculated monthly, quarterly, annually. Article 305 of the Colombian Penal Code stipulates the following on what usury is for the law and its consequences. Usury in criminal law is currently punishable by up to 10 years in prison. On the other hand, fines reach up to 600 legal monthly minimum wages. The crime of usury in the Colombian penal code is punishable by fines and even imprisonment. Hello, I have a credit from Crediservice and monthly they charge me a rate of 23.86 months of arrears, is it legal? For microcredit, the usurious rate for this modality is 55.43% and for consumer loans with a small amount of 44.06%. It is the market that sets the rate of wear.
The Financial Supervisory Authority of Colombia is the body that certifies it. To do this, it validates each month the information provided by the credit institutions and performs the calculation to report it. Once this average is calculated, the result is multiplied by 1.5 and the wear rate is determined as soon as it is. That is, the maximum interest that can be charged for a loan in Colombia. Recently, the SFC issued a warning about Colombian debt, especially with credit cards©and free investment loans©. Good evening, I would like to know if this usurious interest rate also applies in Colombia if it is a personal loan? Always ask for balances that charge fees to the extent permitted by law. The methodology remains unchanged. If the Bank of the Republic then lowers or increases the intervention rate, it is modified.
Check monthly how high the wear rate is. This will let you know when it`s a good idea to manage your debt to improve your terms. Keep in mind that credit cards charge interest rates very close to usurious interest. The use of credit cards has been one of the drivers of household consumption. Gradually, however, the rate of proliferation and therefore also the use of these plastics is increasing. In the second case, we have to charge the interest rate they charge us. This is done by dividing the value of interest by the loan amount and multiplying it by 100. As long as our loan is with formal financial institutions, we can be sure that the interest we pay does not exceed the usurious interest. However, with informal credits (drop by drop, street credits, paychecks), everything changes. If you already have a loan that charges more than the usury rate, remember that this action is illegal. Therefore, you can sue the lender and ask the judge to charge you a fair price. This, of course, as long as your security is not compromised.
At this point, you`ll probably want to read our guide to getting out of drip.