New rules set to govern consumer credit under Law 5317/2026 could potentially shut out 300,000 prospective borrowers from bank financing. Starting November 20, the new law will introduce caps designed to protect borrowers in the consumer credit market — both on the Annual Percentage Rate (APR) and on the total cost of credit — by setting a ceiling on the total amount a consumer may be required to repay over the life of a consumer loan.
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Specifically, the total cost of borrowing will not be allowed to exceed 60% of the original principal for loans with a term of up to 4 years, 70% for loans with a term of more than 4 and up to 8 years, and 75% for loans with a term exceeding 8 years. As for the APR, it will not be permitted to surpass 30% or 50% of the market rate. It is worth noting that the APR reflects the true total cost of a loan or line of credit, expressed as an annual percentage of the borrowed capital. In addition to the nominal interest rate, it includes file fees, approval and collection charges, insurance premiums, and any mandatory contributions. The current average APR stands at 15%.
New rules shut 300,000 prospective borrowers out of financing
The Bank of Greece is expected to publish the average APR for the third quarter of 2026, and it is on that basis that the 30%–50% cap will be defined through a ministerial decision. The new rules will reduce loan approval rates for prospective borrowers with elevated credit risk, as well as for first-time borrowers. Borrowers who previously defaulted, were blacklisted by the credit bureau, and have since resumed regular repayments will face higher interest rates if they apply for a consumer loan, due to their prior credit history.
Real-world examples
The following examples illustrate the types of consumers who may currently have access to bank lending but could face financing difficulties under the new APR cap framework.
– A 38-year-old employee with a history of past arrears. He works in the private sector with a net income of €1,150 and is applying for a €2,000 consumer loan over 36 months. His credit history shows a delay of more than 90 days on a previous obligation within the last 24 months, which has since been settled. Although he is currently meeting all his financial obligations on time, the history of arrears increases his estimated credit risk.
– A 25-year-old entry-level worker with a limited income. He works in the hospitality sector with a net income of €850 and is seeking a €1,500 loan over 36 months to cover personal expenses. He has no history of arrears, but his income is relatively low and his repayment capacity more vulnerable to unexpected financial difficulties. Even if the monthly installment is manageable, the bank may be unable to absorb the estimated risk under the new interest rate ceiling.
– A 27-year-old woman with no prior credit history. She is employed on a permanent contract, earns a net salary of €1,000, and is applying for her first consumer loan of €2,500 over 48 months. She has never taken out a loan or held a credit card, meaning she has no repayment track record on which the bank can base a reliable assessment of her creditworthiness. Although she has no negative entries on her record, the absence of a credit history increases the uncertainty of her evaluation. The APR cap could make financing her loan economically unviable for the bank.
Originally published in MoneyPro by Parapolitika
