Default Interest of 1% Per Day Struck Down as an Unfair Term in a Non-Bank Credit Agreement

At a glance

Client: a consumer

Area: consumer protection, challenge to enforcement

The problem: a RON 2,500 non-bank loan that became enforcement for RON 5,655

Result: the 1% daily default interest and the file fee declared void, enforcement partly annulled

The facts

The client borrowed RON 2,500 from a non-bank financial institution. The agreement provided for remunerative interest of 1% per day, an annual percentage rate above 2,000%, a file-analysis fee of RON 50 and default interest of 1% for each day of delay.

One per cent a day looks small at signing. Annualised, it is 365%. By the time he came to us, enforcement had been opened for RON 5,655, with a garnishment exceeding the statutory cap on deductions from income.

What we did

We attacked terms, not the contract as a whole

We filed a challenge to enforcement based on Law no. 193/2000 and Directive 93/13/EEC, focused on two terms. The file-analysis fee, charged without identifiable counter-performance. And the default interest of 1% per day, disproportionate to the lender's actual loss and stacked on top of already very high remunerative interest.

We raised the garnishment cap separately

The deduction from the client's income exceeded the statutory limit, a point examined independently of whether the terms were unfair.

The outcome

The court found both terms unfair and absolutely void: the RON 50 file-analysis fee and the 1% daily default interest. It partly annulled the enforcement acts, and the bailiff had to recalculate the debt by deducting those amounts.

What was not obtained should also be said. The court upheld the remunerative interest and the APR as knowingly accepted. The reduction came from penalties and fees, not from the base cost of the credit.

What the file shows

A challenge to enforcement is the practical moment when a consumer can first raise unfair terms, even after signing without objection.

The analysis runs term by term, not contract by contract. Some fall, others hold, and a well-built file targets the term with the clearest imbalance.

Frequently asked questions

Is default interest of 1% per day lawful in Romania?

There is no single cap for every situation, but a 1% daily penalty stacked on very high remunerative interest can be held unfair for creating a significant imbalance between the parties.

Can I rely on unfair terms if I signed the contract?

Yes. Signing does not cure the unfairness of a term that was not negotiated. The court examines whether the term was actually negotiated and whether it creates an imbalance to the consumer's detriment.

What if my salary is already being garnished?

The deduction is checked against the statutory cap and a challenge to enforcement is filed within 15 days of service of the enforcement act. The deadline is short.

What happens to the debt if a term is annulled?

The bailiff recalculates the claim by deducting the sums arising from the void terms. The remaining debt continues to be enforced.

Is it worth challenging a small debt?

Usually yes, because penalties accrue daily. In this file a RON 2,500 loan had already grown into enforcement for RON 5,655.