Consumer credit cost caps in Spain

It is worth starting by clearing up a common misunderstanding. Directive (EU) 2023/2225 does not set caps on the cost of consumer credit. What it does is expressly recognize that Member States may maintain their current legal regime in this area and set “caps or usurious interest rates to effectively prevent abuse,” and it tasks the Commission with making those measures public in a concise and clear manner.

In other words: the Union enables, and each Member State decides. Spain has decided to make full use of that option. The draft bill (anteproyecto) on consumer credit agreements, approved by the Council of Ministers and put out to public consultation on January 8, 2026, introduces a regime of caps on the annual percentage rate of charge that did not exist in previous Spanish legislation, and its draft implementing royal decree sets out those caps in Articles 19–23, within the chapter on conduct rules and, in particular, on cost-limitation measures.

The design follows the logic of a decreasing margin: the larger the credit amount, the fewer points can be added over the reference average rate. It reflects a simple idea—the fixed costs of a transaction weigh proportionally more on a small loan—and produces an intended effect: the largest relative cut falls on low-amount, high-cost products, which are the ones the legislator identifies as a source of over-indebtedness.

Three points worth settling before you run the numbers.

First: the cap is expressed as a margin over a reference average rate, not as a fixed figure. This means the cap moves with the market, and the calculation has to be redone periodically. A product that only just fits today may stop fitting if the average rate falls, which is exactly the opposite of what intuition suggests.

Second: the cap applies to the APR, not to the nominal rate. The APR includes fees and other associated costs, so the restructuring cannot be solved by lowering the rate and raising fees: both go into the same calculation.

Third: the tiers are defined by credit amount, which creates threshold effects that should be modeled. A €1,480 transaction and a €1,520 transaction are subject to margins that differ by five percentage points. Any commercial policy that pushes amounts toward one band or the other has a direct impact on the applicable cap.

Alongside the tiered regime, the draft bill provides for a transitional maximum cap of 22%. It is an absolute figure, not a margin: it applies regardless of the reference average rate at any given time.

A transitional cap of this kind serves two purposes. First, it gives a clear, immediate reference while the mechanism for calculating the average rate and publishing it periodically beds in. Second, it sets a floor of protection that does not depend on how the market moves: whatever happens to rates, that is the cap during the transition.

For an institution, that figure is the first filter and the easiest to apply. Before getting into tiers, margins and average rates, the first question is direct: how much of my portfolio is above a 22% APR today? If the answer is a significant share—and for revolving credit and microloans it almost always is—the redesign project is neither optional nor something you can postpone.

The figure should also be treated with the caution that any rule still in the legislative process deserves. The regime comes from a draft bill put out to public consultation, and both the tiers and the transitional cap may change in the text finally approved. What will not change is the direction: there will be a cap, and it will be significantly lower than what is charged today at the top end of the market.

The third row is the most important and the least discussed. Capping the monthly rate and the fee does not solve the core problem of very short-term products, because the cost multiplies through renewal: a thirty-day loan renewed six times is not a thirty-day loan. The rule that the total cost may not exceed that of a twelve-month loan for the same amount targets exactly that practice, and requires lenders to keep a running total per customer and per transaction.

That obligation has systems implications worth anticipating: you must be able to calculate, in real time and before granting the credit, how much cumulative cost that customer has already incurred on that principal. It is not a document check: it is a control that lives in the credit decision engine.

The high-cost regime does not come alone. It comes with a specific authorization from the Bank of Spain (as a high-cost lender, with a planned minimum share capital of €300,000, fully paid up), the gradual repayment obligation and a prior check of high-cost lender databases. It is a complete package, not just a price cap. The details are on our high-cost lender page.

The figure speaks for itself: a €300 microloan over thirty days would go from costing €103 to a maximum of €20. That is a reduction of more than eighty percent in the cost of the transaction, and over three months the cap is €40.

The figure is worth reading for what it says about the design of the reform, not just for its size. A cut of that magnitude is not a margin adjustment: it is a legislative policy decision on the viability of a specific business model. The legislator has identified small-amount, very short-term microloans as the product that generates over-indebtedness, and has set the caps at a level that forces a rethink.

For an institution operating in that segment, the operational conclusion is twofold. First, the model as it exists today stops being viable on its current terms, so the work is not compliance work but product work. Second, the window to do it is measured in months: the provisions of the directive apply from November 20, 2026.

For more than a century Spain has had a regime to suppress usury: the Law of July 23, 1908 on the nullity of usurious loan agreements, known as the Azcárate Act. It remains in force and has been the tool the courts have used to review the cost of revolving credit over the last decade. How it works is well known: case-by-case judicial review based on open-ended concepts.

What is coming now is different: a statutory, quantified, ex ante cap. The obvious question is how the two relate. The European directive gives a clue by recognizing that Member States may maintain their current legal regime and set caps or usurious interest rates: it presents them as compatible, not as alternatives.

This leads to two scenarios worth keeping in mind when you design your pricing policy:

• Above the legal cap. The breach is objective and requires no debate about whether the interest was “notably higher than the normal price of money.” The ground is no longer a matter of interpretation.
• Below the legal cap. This is where the open question lies. Complying with the legal cap does not automatically make a price immune to a usury challenge, because review under the 1908 Act also takes the circumstances of the case into account. But it is reasonable to expect that sitting comfortably below the cap will significantly strengthen the institution’s position.

For anyone managing a revolving credit portfolio, the second scenario is the relevant one: the new regime does not eliminate the risk of claims, but it changes the starting point of the debate. Read this page together with our revolving credit page, which covers case law and defense.

Every price-cap regime creates the same incentive: move cost out of the main contract and into associated products. Insurance, assistance services, extended warranties, maintenance fees. If the cap calculation does not include those items, the cap does not work.

The reform tackles this from two angles. The first is that the cap applies to the APR, which by definition includes the costs associated with the credit, and not to the nominal rate. The second, and more direct, is that according to the summary published by the Bank of Spain the bill will prohibit tying practices, as is already the case for real estate credit.

The distinction between tying and bundling is the one to master here, because it decides which commercial practices survive. Broadly speaking, tying makes the granting of credit conditional on taking out another product; bundling offers the package but lets the customer take out the credit separately. In real estate credit this boundary has generated years of litigation, and you should review it across your commercial catalog before the rules come into force, not after.

The practical consequence for the product team is that the pricing review cannot be limited to the credit rate. You need to inventory everything sold alongside the credit today and determine what goes into the APR calculation and what is being offered on a conditional basis.