Law on Consumer Credit

Armenia

(enacted in 2008)

The Law on Consumer Credit of 2008 applies to banks, credit organizations (including microfinance organizations), and pawnshops in Armenia. Loans that are provided to individuals for consumer purposes and range between the Armenian currency equivalency of USD 250 – USD 25,000 are classified as consumer loans. The Law on Consumer Credit sets a number of requirements for extending consumer loans, such as disclosure of certain terms and conditions of the loan in the contract as well as in any advertisement. This law also requires that financial institutions communicate to consumers changes to the terms of the contract and their rights and obligations, as well as provide monthly loan account statements by post, unless other means of communication have been agreed to by consumers. The Law on Consumer Credit also introduces the concept of an Annual Percentage Rate (APR). The APR includes interest and any charges that must be paid by the borrower for the credit. The APR has to be clearly specified in the loan contract as well as any advertisement of the credit. Under this law, consumers may prepay the loan without penalty at any time during the life of the contract and are entitled to a “œcooling off period.” During this period, the consumers can refuse to take a loan within a certain period after signing the contract and do not have to pay a penalty fee.

DISCLAIMER: Due to the fact that an English translation was unavailable for this law, information for this summary has been taken from secondary sources and not from review of the actual legal text.