The cabinet led by President Rumen Radev has quietly overhauled consumer protection standards regarding quick loans, according to reporting by Mediapool.bg. Approved during a cabinet session on August 27 and formalized on September 1, the newly drafted Consumer Credit Act strips away guardrails designed to shield vulnerable borrowers, low-income households, and gambling addicts from predatory debt spirals.
Lifting the Cost Ceiling on Micro-Loans
Under current Bulgarian regulations, the annual percentage rate (APR) for consumer loans up to 75,000 euros—a category encompassing fast cash advances—cannot exceed five times the statutory interest rate. With the statutory interest rate holding at 10.4% as of September 2026, the existing legal cap sits at 52% annually. APR serves as a comprehensive metric capturing all interest rates, fees, commissions, and associated borrowing costs.
The freshly adopted cabinet bill introduces an exception for smaller borrowings. For quick loans valued up to three times the minimum monthly wage—amounting to 1,860.60 euros this year—the APR cap vanishes. Instead, a metric labeled the “total cost of credit” was introduced. According to texts, this alternative cost limit scales directly with loan duration:
- Up to 20% of the principal for repayment terms lasting up to one month.
- Up to 30% of the principal for terms stretching from over one to three months.
- Up to 100% of the principal for a longer term.
Financial calculations illustrate the tangible shift for consumers. Under current rules, a borrower taking an 1,860-euro quick loan for a year returns a maximum of 2,827.20 euros, covering the principal plus 966.60 euros in APR charges. Under the new provisions, borrowing that same 1,860 euros for a three-month term caps total repayment at 2,418 euros—incurring 558 euros in borrowing costs. However, extending that same loan to four months or more allows lenders to double the initial sum, forcing borrowers to repay 3,720 euros.
Eviscerating Default Penalties and Locking Out Regulators
Beyond raising the cost ceiling, the legislative changes eliminate protections governing loan defaults. Current statutes explicitly state that penalty interest on overdue payments cannot exceed the statutory interest rate, restricting lenders to charging interest solely on the delinquent sum during the period of default. The newly approved cabinet text removes these restrictions, leaving defaulting borrowers exposed to the compensation for default written into the contract.
Controversy also surrounds the legislative drafting process regarding problem gambling. During the public consultation phase, the Association of Quick Credit Companies (AONK) petitioned the government for direct access to the National Revenue Agency’s Register of Gambling Vulnerable Persons. Lenders argued that viewing the registry would allow them to limit the granting of loans to people who risk gambling them away. The cabinet denied this request, blocking lenders from accessing the registry.
Bogomil Николов emphasized the need for a new register for quick loans, noting it is a Bulgarian addition that is needed.
The Road Ahead for the Controversial Legislation
The approved bill now awaits formal introduction into the National Assembly, where it will face parliamentary debate.
