New rules opening up Europe's consumer credit market will help 500 million people get better and cheaper loans if the move is approved by MEPs in Strasbourg today.
At the moment only 1 per cent of credit deals are done across EU borders, with borrowers put off by differing national interest rates and regulations, as well as language problems and a lack of clear information.
Europe's Directive on Consumer Credit Loans will not standardise interest rates, but it will bring in a single EU-wide method of calculating the annual percentage rate (APR) to make competing offers easier to compare.
Credit loan information will be streamlined in 27 countries too, with all necessary facts and figures set out for clients on the same standard credit form.
EU Consumer Affairs Commissioner Meglena Kuneva said a genuine cross-border market in consumer credit was long overdue.
"Consumers are being denied choice and more competitive offers, and competitive business is being denied opportunities to access new markets," she told the European Parliament yesterday.
New rules were needed "to start to break open the potential of the EU single market and boost competition and choice."
The standard information form for taking out loans would make it easy to make direct comparison of rival loan offers in any member state, and the single interest rate calculation method would enable customers to see clearly the real cost of any credit agreement.
The new rules also sets common standards on the right of withdrawal from any consumer agreement in the EU, without having to give a reason and without any charges.