25% Maximum Interest Rate on Consumer Credit Introduces Stronger Consumer Protection

For the first time, a legal limit is being established on the interest and costs that may be charged on consumer credit, including cash loans, credit for the purchase of goods, and credit involving the pledging of goods as collateral.

This regulation is being introduced through the entry into force of Article 5 of the Consumer Credit Regulation Ordinance (Landsverordening Regeling Consumentenkrediet, LCK). This article provides the legal basis for regulating credit costs and is intended to prevent situations in which consumers are faced with excessive financial burdens.

Previously, Aruba did not have a legal limit on the costs of consumer credit. The entry into force of this regulation marks a milestone in a process that was initiated under the previous government. During that period, preparations were made, research was conducted, and discussions were held with stakeholders. Following this preparatory work, the regulation will now enter into force, providing concrete protection for consumers in Aruba.

The 25% maximum interest rate on consumer credit is the central element of the first implementation phase of the Consumer Credit Regulation Ordinance (LCK). By establishing this legal limit, the government is clearly defining the maximum level to which interest and credit costs may rise. This provides consumers with greater certainty and protection in the financial market.

"By introducing a 25% maximum, we are setting a clear limit to protect consumers. This is a historic step in strengthening consumer rights in Aruba. It is also an important milestone in a process that we started during the previous cabinet and that is now finally entering into force for the benefit of all consumers," said Minister of Finance, Economic Affairs and the Primary Sector Geoffrey Wever.

The ministerial regulation based on Article 5 also establishes rules regarding payments in cases of payment arrears, early repayment of loans, and extrajudicial collection costs.

According to Minister Wever, introducing a 25% maximum creates a better balance between consumer protection and access to credit.

"We recognize that many families and individuals depend on access to credit. Therefore, we do not want to restrict access to financing, but we do want to prevent consumers from paying excessively high costs. The 25% maximum provides the right balance between protection and access to credit."

The government has chosen to implement the regulation carefully and in phases. "We are starting with the component that has the most direct impact on consumers: the 25% maximum on the cost of credit. We are introducing this limit for the period from August 1, 2026, through the end of December 2027. The other key components of the Consumer Credit Regulation Ordinance (LCK) will subsequently be implemented in phases.

We have chosen to implement this regulation carefully in order to maintain a balance between consumer protection and market stability. We want to protect consumers while recognizing the important role of businesses that provide credit to many families and individuals. Therefore, we will continue to monitor the impact of the regulation and carefully evaluate its effects."

For the time being, the introduction of the 25% legal maximum will primarily have civil-law implications. This means that consumers may invoke the new legal standard before a court if a credit provider fails to comply with the established limit. As the other provisions of the Consumer Credit Regulation Ordinance (LCK) are gradually implemented, including provisions related to supervision, the competent authorities will be able to monitor compliance with the law and, when necessary, take direct action in cases of non-compliance.

The entry into force of Article 5 does not mean that the entire Consumer Credit Regulation Ordinance (LCK) will take effect immediately. Other key components of the legislation will be implemented at a later stage. These include broader information requirements for credit providers, standards for responsible lending, the establishment of a credit registry, and supervisory and compliance instruments.

By introducing the 25% legal maximum, the government is providing consumers with concrete and immediate protection while promoting a level playing field within this market segment. At the same time, Aruba will continue working toward the phased implementation of the other key components of the Consumer Credit Regulation Ordinance.

Minister Geoffrey Wever expressed his appreciation to the Central Bank of Aruba and the Directorate of Legislation and Legal Affairs for their efforts and the work carried out.