Court Upholds Maximum Annual Percentage Rate (“APR”) of 27% Set by the CBCS

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Central Bank of Curacao and Sint Maarten. Photo stmaartennews.com


Court Upholds Maximum Annual Percentage Rate (“APR”) of 27% Set by the CBCS, while
Adjusting the Transition Period and Establishing a Distinct Maximum for Three-Month
Loans

Willemstad/Philipsburg – By decisions addressed to lenders in Curaçao and Sint Maarten, the Centrale Bank van Curaçao en Sint Maarten (CBCS) has established a maximum APR of 27 percent. The maximum APR consists of the total costs of the credit, expressed as an annual percentage of the total credit amount.

The maximum APR is intended to protect consumers from usurious interest rates and excessive credit costs.

Four lenders appealed this measure by the CBCS up to the highest court. On February 1, 2021, the Joint Court of Justice ruled1 in this case that:

1. The CBCS had “correctly tipped the balance against the appellants and other lenders and in favor of the interest of consumer protection […].” and that CBCS was “authorized to determine that a maximum APR of 27 percent will be attached to the dispensation”;

2. The effective date (as amended) will be June 1, 2021; 

3. A maximum APR of 45 percent, in effect until June 1, 2023, is determined for loans with a term of three months or less.

The Court’s special treatment of the effective date and the temporary application of a different percentage for three-month loans is limited to the appellants concerned; the other notified lenders remain fully bound by the 27% APR cap on all consumer loans.

This Court ruling has provided clarification after years of litigation. The CBCS will monitor compliance with the APR-maximums both to protect consumers from excessive credit costs and to promote a sound and trustworthy financial system.

Questions on the APR-maximums may be submitted in writing to the CBCS at cbcs@centralbank.cw.