Court ruling could set a presedence for Spanish loans

 

An Andalucian court has instructed a number of banks to remove certain clauses in the smallprint of their variable-rate loan contracts that have prevented thousands of debtors from benefitting from the low interest rates that are being seen at the moment.

The 'minimum-interest clause' was included in many contracts issued over recent years and has meant that while the Euribor interest rate index - used throughout Europe by a number of money lending and financial institutions - fell to record lows of less than 1.3 per cent, debtors still had to pay back the loan at a much higher percentage.

This ruling was made against BBVA, Caixa Galicia and Cajamar and was brought against them by banking consumer watchdog Ausbanc, who claimed that the minimum-interest clauses were abusive.

The watchdog claimed that many other Banks in Spain also use the 'minimum intrest' clause, which affects millions of loan holders, and the ruling could set a presendence in allowing them to demand their money back.