You have no idea how many readers of Dele Peso a sus Pesos have written to me looking for a way out of a problem that seems to have no end: debts with loan sharks. I got advice from two lawyers and here is all the information you need to know about it.
This is a very frequent and thorny phenomenon in Nicaragua. It is seen in the markets – with people who lend for a single day at 10%, 20%, 30% interest (sometimes more); in the free zone companies, where the lenders ask for the debtor’s debit cards as collateral and there are even lenders who for a few thousand dollars mortgage houses, which they even take possession of.
The first thing I want to clarify is that not just anyone can be a moneylender. The Ley Reguladora de Préstamos Entre Particulares (176) in its article 1 clearly states that in order to engage in lending money at interest (and therefore be recognized as a moneylender) such a person must:
Declare themselves as lenders in public deed which must contain:
- Names, surnames, general law, identification data;
- Exact address of the place of business where it will carry out operations.
- List of accounting books that it will keep, which will be reasoned by the Public Registrar of the Department.
At the time of signing a money lending contract you should require the lender to provide you with a certificate of registration with the Public Registry. If you owe someone who has not complied with these requirements, you have that in your favor.
Likewise, when you contract the loan through a public deed, the notary who draws it up must demand the lender’s certificate from the lender.
The second thing you should know is to identify when you become a victim of usury. This will depend on the date on which the credit was contracted.
The first period, based on Law 176, indicates that the maximum interest rate at which loans between individuals may be agreed upon “shall be the highest interest rate charged by commercial banks authorized in the country, on the date the loan is contracted, plus an additional percentage no greater than 50% of such rate”.
The second period is covered by Law 374, (Law of Amendments to Law No. 176), which reduces the maximum annual interest rate at which such loans may be agreed to “the weighted average interest rate charged by commercial banks authorized in the country, on the date of contracting the loan, in each item”. You can see the rates for that period here.
What is the maximum you can be charged?
If the current legislation indicates that the maximum interest rate is twice that rate set by the BCN, the most you should pay to a lender is 20.9% per annum, or 1.74166% per month. Check out QVCredit Singapore Licensed Money Lender for more rates and computations.
Note: this does not apply to licensed financial institutions, which are regulated by their own laws (banks, finance companies and microfinance institutions).
If you contracted a loan with a private individual, check what rate was in effect on the date of signing and if the rate you were charged exceeded what was established by law, you have the right to denounce it. You have up to ten years to initiate the process. After that period, the statute of limitations will expire.
If you want to know more, check out for more info.