§ 5-11. Term of annuity loans when the interest rate changes

This section governs what happens to the repayment period of an annuity loan (a loan repaid in equal instalments) when interest rates and other credit costs change. The general rule is that the agreed term stays fixed. In other words, the bank cannot simply extend the loan because the interest rate goes up. The exceptions are found in the second and third paragraphs.

If the total credit costs increase, the term can be extended, but only by agreement. If the customer is a consumer, such an agreement can only be entered into after the customer has received notice under § 3-13 second and third paragraphs. Under § 3-13, a change to the customer's disadvantage can take effect no earlier than two months after the notice, and a proposal to change interest rates, fees or other costs must state the reasons. Example: the interest rate rises and costs increase. The bank and the customer can then agree on a longer term, but the consumer must first have received notice.

If costs go down, it can be agreed in the credit agreement that the size of the instalments stays the same. The term then becomes shorter, since the loan is paid off faster. This is an option that must have been agreed in advance in the credit agreement. The law does not say that the bank must offer it.

This section is part of the rules on the credit relationship in Chapter 5. § 5-9 gives the customer the right to a repayment plan on request, and § 5-10 limits which fees the lender (kredittyter) can charge. § 5-12 gives consumers the right to convert foreign currency loans (valutalån). § 5-13 lets the customer terminate the credit agreement with a notice period of no more than one month for consumers, while § 5-14 gives the lender the right to terminate open-ended agreements when there are objective grounds, with at least two months' notice to consumers. § 5-15 concerns blocking (sperring) of the credit facility, and § 5-7 prohibits usury (åger) and § 5-8 tied selling (koblingssalg).