Even “Beto” Won’t Lend You, Because Usury Law Affects Quick Loans

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(QCOSTARICA) The entry into force of the reform which established a ceiling interest rate on loans and credits generated changes in the fast lending sector, including fast lenders such as “Beto” and “Instacredit” .

The decision of these major lenders and others in the Costa Rican financial market is to comply with the reform of Ley 7472 (Promotion of competence y defensa efectiva del consumidor), which establishes, among other things, that the Banco Central (Central Bank) will set a ceiling on lending rates in the country.

– pay the bills –

Last Friday, July 3, the Central Bank capped lending at 37.69%, in colones, and at 30.36%, in dollars, and at 7.44% for loans in other currencies (i.e. i.e. in euros), 7.44%.

For example, with the maximum interest rate set at 37.69%, Beto suspended loans to new clients.

Beto – formerly known as ‘Beto lo presta’ (Beto will lend you) offering fast personal loans, with little paperwork to low and middle income populations, has been in the Costa Rican market for 10 years and over. 550,000 loans during this instant.

The company, which is part of Grupo Gente, is also present in El Salvador, Guatemala and Nicaragua, under brands such as Multimoney and Kuiki.

– pay the bills –

Before the new cap came into effect, Beto was promoting loans of up to 8 million yen or $ 15,000 up to 60 months, without any kind of collateral or guarantor, approved in less than 24 hours, at a monthly interest rate of 3.25% in colones (equivalent to 39% per annum), in addition to the formalization fee of 10%. Beto also offered interest-free credit for up to 24 months to some 300 “affiliate” merchants.

Beto adjusted its rates to meet usury law guidelines, 3.14% per month in Colones and 2.53% per month for dollar loans, not to mention the 10% processing fee. However, the company is not lending at this time.

A feature of Beto was “re-presto,” making it easy for clients to take on new loans as they developed a payment history.

“This law requires us to review the segmentation of future customers and there will undoubtedly be segments that we will unfortunately have to stop following due to their risk and associated costs, and which cannot be covered by the imposed price cap. by the law.

“For new customers we are making the necessary changes both in the systems and in the contracts to adapt and comply with the law, that way we will restart very soon”, said Alberto Dobles, Managing Director of Beto in Costa Rica.

– pay the bills –

For its part, Instacredit, a company that offers approved loans in 20 minutes and 0% formalization costs, claims to have made adjustments to its structure.

“This (the new law) forces financial institutions to reinvent themselves and seek new product and solution alternatives that adapt to the new regulatory framework,” the company said in a statement. “Over the past 12 months, Instacredit has made a series of adjustments to its structure, aimed at adapting the business model to the new reality of Costa Rica, in order to ensure the survival of the company. “

Instacredit has twenty years in the personal loan market in Costa Rica, with some 1,000 employees and 46 offices, and international operations in countries such as Mexico, Nicaragua and Panama, which are part of Financiero Contigo. .


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