In some cases, trade and service enterprises first provide a person with the opportunity to pay for goods or services in installments, and then transfer the rights to claim the debt to professional creditors. It has become practice when goods purchased by customers are paid for by the so-called installment service operators affiliated with creditors.
In its information letter, the regulator recommended that lenders should refrain from participating in such practices, since they have signs of bypassing consumer credit legislation.
The relationships that arise in these cases are essentially similar to credit-loan ones, but formally are not covered by the law ‘On Consumer Loans.’ This means that the rules of informing borrowers, restrictions on borrowed funds’ cost and fine size, as well as claim assignment restrictions do not work. Besides, sellers and installment service operators are not required to transmit information to credit history bureaus. If a citizen applies for an ordinary loan, the lender does not see installment obligations in his/her debt load and cannot take them into account when deciding to issue a new loan.
This news item was originally published by the Central Bank of the Russian Federation (CBR RU). For more information, please see the Source Link.
