Credit cards Personal loans Credit lines Leasing What you should know before entering into an agreement

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1 Credit cards Personal loans Credit lines Leasing What you should know before entering into an agreement Pre-agreement information on personal financing products for private clients

2 Taking out a loan is a big decision to make whether it s a personal loan you ll have repaid within a couple of years or a credit card agreement with no fixed term. But whatever type of personal financing you take out, one thing holds true for all of them: you ll have to pay all of it back, including interest, which will probably mean having to review your everyday spending in order to be able to do so. Before you apply for personal financing, we want you to know: what these services actually entail; which service (if any) best meets your needs and the options open to you; and what the risks involved in taking out loans are and the impact they might have. In this brochure you ll find information about your rights and obligations as a borrower if you take out a personal loan or Credit line or enter into a leasing agreement or apply for a credit card. Please note that the terms and conditions described herein are not binding: if you decide to enter into an agreement for a personal loan, credit card, Credit line or leasing, the specific terms and conditions of that agreement will apply to you. The specifications of this document also apply to a leasing agreement, unless it arises otherwise from the nature of the leasing agreement. For more detailed questions concerning leasing, please contact Swedbank Liising AS by telephone or liising@swedbank.ee.

3 Contents Some pointers from the Consumer Protection Board...2 Recommendations to borrowers...3 Terms used when talking about personal financing...5 Prerequisites for entering into an agreement...6 Entry into agreements and issuing of credit...7 Calculating interest...8 Repaying loans and paying interest...9 Repaying your loan ahead of time Collateral Other costs associated with your agreement Amending your agreement Potential consequences of breach of agreement Sale of collateral Terminating your agreement What to do to avoid falling into debt Not satisfied with a decision we ve made?

4 Some pointers from the Consumer Protection Board To ensure that your personal financing decisions are as informed as possible, answer the following questions before you apply. Have you honestly assessed your financial position, and are you prepared for the eventuality that your income next year might not be as high as it is this year? Have you gone over all of the terms and conditions of your agreement to the point that you understand every point and have no questions? Are you 100% sure that the personal financing you re intending to apply for is the best one for you and that it takes your lifestyle, income, consumption habits and other factors into account? Are you aware of how much the loan will end up costing you in the long run, and if so, is the amount feasible? Do you have a good reason for applying, or are you taking out the loan on a whim? Have you thought carefully about the most suitable repayment schedule (interest payments on the balance or amount of your loan/credit card, the repayment period et al.) given your income? Are you prepared for the fact that you and your family might have to curtail your spending because of the loan? Have you calculated how much you will have to spend on food, clothes and other things each month after you make your repayments? Will you have enough money left over? Do you have a back-up plan in case you and/or your partner lose your job or find yourselves no longer able to work? Have you asked what happens if you run into problems making your repayments? If you ve answered all of these questions honestly and some of the answers are still no, 2

5 you should rethink your decision taking out the loan or applying for the credit card or Credit line could leave you worse off in the end financially rather than the other way round. Recommendations to borrowers Anyone who s planning to take out personal financing should weigh up the pros and cons before doing so. The following are a few recommendations which should help you make an informed decision. Consider whether you really need the loan Before borrowing or applying for credit, you should consider whether you really need it. Weigh up the alternatives. Think about whether you truly need whatever it is you plan to do or buy with the financing you re intending to take out right now, or whether it s something that could wait. Don t settle for the first type of financing that s offered to you Loans are issued for different purposes and with different terms and conditions. If you consult a decent adviser and are honest with yourself, you should find the most suitable and most affordable financing option for you. Borrow a sensible amount When considering whether to apply for personal financing, think carefully about what you need the loan for. If you borrow less than you actually need, you could well find yourself needing to apply for another loan the problem then being of course that you ll have to pay more fees. 3

6 Make sure you know what the terms and conditions of your loan are Reading through the fine print of an agreement might not be the most entertaining pastime in the world, but if you don t familiarise yourself with the conditions of your loan it could lead to problems. Always go over the terms and conditions with a fine-toothed comb, and ask for clarification if there s anything you don t fully understand. Interest don t pay through the nose! When you take out a loan it s important to know how the interest on it will be calculated. It s not only the amount of your repayments that this determines, but also how much the loan will cost you overall. Find out what other costs you will incur When you take out personal financing it s normally not only interest that you have to pay take other costs into account before you sign on the dotted line. Make your repayments on time To guarantee that you make your payments on time, all you have to do is ensure that there s enough money in the agreed current account each repayment day. Talk to us! It s always a good idea to talk to a consultant before you make important decisions. Our employee will draw up your agreement, after which you can go through the terms and conditions with them and ask for clarification on any points you re not sure about. 4

7 Terms used when talking about personal financing You, as the Client, are an individual who has entered into an agreement with the bank. Depending on the specific agreement you have entered into, you may be referred to as the Account Holder, the Cardholder or the Borrower. We, as the Bank, are Swedbank AS, registered in the Estonian commercial register under code , located at Liivalaia 8, Tallinn, Estonia. Activity licence: EP-13PO, Republic of Estonia Field of activity: bank transactions Contact details: Telephone: Fax: Swedbank AS is a member of the Estonian Banking Association: Swedbank AS is guided in its operations by the Principles of Sound Banking Management: Aktid/pangandustava/ Swedbank AS is supervised in its operations by the Financial Supervision Authority (postal address: Sakala 4, Tallinn 15030; telephone: ; fax: ; info@fi.ee; website: A credit card (such as American Express Blue and Visa Gold) is a means of payment with which we have granted to your use a loan on the basis of an agreement. A loan is the maximum amount you borrow or the credit limit which the Bank issues to you as a loan on the basis of the agreement into which we enter with you or which you as the Client may use. An agreement is the credit card, Credit line, leasing or personal loan agreement we enter into with you. 5

8 Prerequisites for entering into an agreement In order to enter into an agreement, you have to meet a few prerequisites. First of all, you have to have a current account with the bank. If you are applying jointly, the other person has to have a current account with us, too. A current account number is needed for your agreement, since that s the one from which your repayments and fees will be deducted. If you d like to change the account that s connected to an agreement you ve already entered into, let us know or submit an application via the Internet bank. If you d like to take out a loan, you have to submit an application. Before entering into any agreements, however, you should read through the information sheet, the terms and conditions of the specific agreement you re entering into and the standard terms and conditions of the service. You should also take a look at the other documents referred to in the terms and conditions of the agreement you re entering into, such as the General Terms and Conditions of Swedbank AS and the Principles of Client Data Processing in the Estonian Companies of the Swedbank Group. Before entering into an agreement, you should be fully aware of the nature of the obligation you re taking on and the risks associated with it. You should also consider whether you ll be able to repay the loan if your income decreases or your costs rise. Contact one of our consultants or another financial specialist if you need any clarification or advice. How capable you are of making your repayments is also something which the bank assesses. We check whether your 6

9 income or savings are enough to pay back what you owe and take into account your existing financial obligations known to the bank and your credit history. What s important is that the information you give us is both accurate and adequate. It s also important that you re able to repay what you ve borrowed or owe without having to take out another loan. Before entering into any agreement with you, we calculate a reasonable loan amount based on the information collected. But the final decision on whether you borrow from us or not is entirely up to you. To this end you need to determine, based on the information we give you, whether the financing we re offering (including the terms and conditions that come with it) meets your needs and the options open to you. Entry into agreements and issuing of credit If you decide to accept our offer, we ll enter into an agreement with you which sets out all of the key terms and conditions of the agreement, such as the amount of the loan, credit or Credit line and the interest rate. You have to sign this part of the agreement. The second part comprises the standard terms and conditions, which you don t need to sign. Personal loan agreements also come with your schedule of repayments. In most cases you can access the credit you ve been issued with as soon as you sign your agreement, but at the latest within three banking days of your agreement entering force. If collateral is required for your loan, you ll have to enter into an agreement to this effect with the bank first; only then can the loan be issued to you. 7

10 In exceptional cases, additional terms and conditions may be enforced on the issuing of a loan, but these will be set out in the agreement. For example, in certain cases you have to have paid off a previous loan before another loan can be issued to you. Withdrawing from your agreement After signing on the dotted line, you have 14 days in which to withdraw from your agreement if you wish to. You can do this by submitting an application to this effect to the address marked in your agreement or via the Internet bank. If you withdraw from your agreement, you ll have 30 days from the date on which you submitted your withdrawal application to repay the amount of your loan to the bank, plus any interest which accrued by that date. If you don t repay the loan within this period, we ll assume that you ve changed your mind and have decided not to withdraw from your agreement after all. Calculating interest Interest is the fee you pay the bank for use of the credit we issue you with. You have to pay interest on either the outstanding amount of your loan or the amount you have used at the rate set out on in your agreement. (The interest rate is the amount of interest per year expressed as a percentage.) We start calculating interest on the day we issue your loan to you, with the basis of our calculations being the actual number of days in a calendar month and a 360-day year. The interest rate indicated in your agreement is fixed for each client separately and depends on the terms and conditions of the agreement (such as the amount and term of the loan), your creditworthiness and your credit history, as well as any collateral that may be required. If you d like to change the terms and conditions of your agreement (applying, for 8

11 example, for an additional amount, a break from repayments or extending the term of the agreement) but the risks associated with you as a client have increased, we may amend the interest rate we apply to your loan. We ll also inform you of this in advance (in the case of credit cards, two months in advance). Repaying loans and paying interest General We deduct your repayments, interest and other fees payable from the account you specify in your agreement. If you don t have enough money in this account on the repayment date, we deduct the amount in question from another account you have opened with us. If you have taken out your loan with a co-applicant, we have the right, where necessary, to deduct the amount from both of your current accounts. If none of your accounts have enough money in them on the repayment date in the required currency, we may deduct the amount in other currencies, converting the sum (at your expense) on the basis of the exchange rates valid in the bank at the moment of conversion. If your accounts include various currencies, the bank will determine the order of preference in which they will be used to this end. Information about the latest exchange rates can be obtained: online at from any of our branches; or by calling Customer Support on Credit cards If you ve used credit, on the repayment date we deduct the agreed amount plus any interest and fees from your current 9

12 account tied to the agreement or, if there is no money in the main account, from other accounts. You need to ensure that a sufficient amount of money is in your current account on the right day. When your agreement expires, you need to pay back the entire amount of credit you ve used plus any interest. Personal loans Personal loans are subject to monthly repayments plus interest, which represents a fee for use of the loan. The only time you don t need to make repayments on the basic amount of your loan or the basic amount plus interest is if you ve taken a break from repayments. The amount and number of the repayments and the interest they re subject to can be found in the repayment schedule attached to your agreement. The schedule is informative in nature. The amount of interest you pay as part of your monthly repayments is determined by the terms and conditions of the drafting of your schedule, which is to say the type of schedule. In the case of personal loans we use an annuity payment schedule. This means that the monthly repayments on your loan (including interest) remain the same for the term of your agreement. The only exceptions are the first and last payments, which may be different due to rounding and to the gap between the date on which you entered into your agreement and the first repayment date. We draw up a schedule for you when you enter into your agreement and issue it to you as part of your agreement. If you enter into your agreement via the Internet bank, the schedule will be automatically generated, and you can access it at any time. If you wish to, you can also obtain a paperbased copy of your schedule at any point during the term of your agreement free of charge from any branch. 10

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14 Credit line You will have to make monthly interest payments to the bank on the credit limit used, and monthly payments of the charge arising from obligations on the credit limit not used. You can use the credit limit within a year of entry into the agreement without repayment of the credit. If possible and if you want to, you may also extend the period of use of the credit, upon an agreement with the bank, by one-year increments. Thereafter you have to repay the used credit in the manner agreed on in the agreement in the form of monthly repayments. During the repayment period, the maximum credit limit is the amount that was in use at the end of the period of use of the Credit line. Repaying your loan ahead of time Credit cards and Credit lines You can pay back any or all of the amount of credit you ve used ahead of time whenever you like. Personal loans If you d like to repay your loan, in full or in part, ahead of time, you will need to compensate the bank for the interest it will lose as a result, which is indicated in the bank s price list. Collateral Sometimes you need to provide collateral on a loan. This can be a deposit or some form of security. If you d like to amend the terms and conditions of an agreement you ve already entered into (e.g. applying to increase 12

15 your credit limit or for a break from repayments), we may ask you to provide additional collateral. Other costs associated with your agreement You will find information about the fees for all of our services and about other costs in the bank s price list, which is available online at Credit cards In addition to interest, you have to pay a monthly or annual fee for use of your credit card. If you also make use of additional services (e.g. withdrawing cash, visiting Priority Pass lounges at airports or ordering an emergency card), you have to pay for these separately in accordance with the bank s price list. The bank also has the right to charge a fee if you want to amend your credit limit. The other fees listed in credit card agreements may be, for example, the card replacement fee, the card cancellation fee, the fee for ordering a statement from a previous period, the fee for ordering a copy of a receipt or the fee for the issuing of a temporary card. Personal loans, Credit lines and leasing When you take out your loan, you have to pay the bank an agreement fee. The amount of the fee and the way in which you should pay it will be set out in your agreement. You also have to pay an agreement fee if you decide to amend an agreement you ve already entered into. The amount of this fee depends on the amendments that are made and the price list valid at the time. If you enter into an agreement via the Internet bank or over the phone, you will have to pay for the communications costs involved in doing so yourself. 13

16 Amending your agreement Credit cards We have the right to unilaterally amend your agreement by informing you that we ll be doing so at least two months in advance. You can also check what changes we ve made at any branch, on our website or in other ways determined by the bank (such as information provided to the media). If you re not happy with the changes we ve made, you have the right to terminate your agreement within the timeframe given. If you don t cancel it during this period, we ll assume that you re OK with the changes that have been made. Personal loans and Credit lines Amendments to the terms and conditions of an agreement can only be made on mutual agreement and on condition that you meet responsible borrowing requirements at the time. Contact us if you d like to amend your terms and conditions. Once we ve agreed on the changes, we ll draw up an annex to your agreement and lock them in. If you re planning to amend the terms and conditions of your agreement, bear in mind that you ll incur additional costs (such as the fee for entering into an annex to your agreement) and that the interest rate might change. This could be the case if key aspects of the loan such as the total amount and the repayment deadline are changed. When extending the use of the credit limit of the Credit line, the standard terms and conditions of the service valid at the time will apply to it. The bank has the right to unilaterally amend the agreement and its standard terms and conditions if the legislation governing them changes and they need to be brought into line with the new laws or regulations. We will let you know about any such changes in advance. If you aren t happy with them and would like to terminate your agreement, you can do so without incurring any additional costs. 14

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18 Potential consequences of breach of agreement If you enter into an agreement but breach its terms and conditions, you could be held financially responsible for doing so. You may be asked to pay: a late payment penalty and/or fine and/or administrative costs; costs related to the cancellation of your agreement; currency exchange costs if there is not enough money in your account on the repayment date in the necessary currency and we deduct the amount in another currency (see page 9); or other costs associated with the fulfilment of your agreement and other related agreements (such as court fees and costs connected with bankruptcy proceedings). You will find the bank s price list online at If there isn t enough money for repayment of the loan in the current account indicated in your agreement on the repayment date, the bank has the right, starting from the next day, to begin calculating a penalty for late payment on the outstanding amount based on the price list. We stop calculating the penalty as soon as you transfer the total amount due to be repaid. In the case of credit cards, the bank has the right, upon breach of the agreement, to cancel your card and to refuse to issue you with a new one. This means that if you breach your agreement, the bank may not necessarily give you a new card when your current one expires. If you fail to repay your loan or the interest on it by the deadline, a further 20 days pass in which you still do not pay and the bank has sent you a second reminder, you will then 16

19 also have to pay a fee for the processing of your debt, if this is indicated in the price list. The bank imposes a fine for the use of a credit card which has been closed. If you breach a personal loan or Credit line agreement, the bank has the right to fine you in accordance with the terms and conditions of your agreement. You may be fined if you fail to inform the bank when: something happens which could make it difficult or impossible for you to fulfil the terms of your agreement; enforcement or court proceedings are launched against you; or you take out another loan or enter into a leasing agreement or provide collateral for someone else s loan. The bank also has the right to require a fine if you do not submit to the bank, in justified cases, documents certifying your economic situation. In general, your regular income should be paid into the current account in the bank you ve taken out your loan with for the entire period of the loan, so that the bank can observe the principle of responsible lending. Breaching this condition could have negative consequence for you, too. Other obligations may be set out in the special terms and conditions of your agreement, and you will also have to meet these. Breaching them could lead to you being fined, and the bank might terminate your agreement. Also remember that paying the fee for the processing of your debt or any penalty or fine you ve been issued with doesn t free you up from having to meet the obligations of your agreement thereafter. 17

20 Sale of collateral If you ve been granted a loan on the basis of collateral, a situation may arise where that collateral needs to be sold. The bank may be forced to do so if you fail to fulfil the terms and conditions of your agreement and can t come to an agreement with the bank in terms of a solution that will allow you to meet your obligations in a way that suits both parties. In such a case the bank has the right to terminate your agreement on the terms set out therein and put the collateral up for sale. Terminating your agreement In certain cases the bank has the right to terminate your agreement and demand that you repay your loan, along with any unpaid interest, agreement fees, charge arising from obligations, penalties and fines, and meet all of the other requirements arising from your agreement. In the case of credit cards and personal loans, the bank may terminate your agreement if: you ve failed to repay your loan in part or in full for three consecutive months and don t pay off your debt within two weeks of receiving a request to do so from the bank; you fail to meet other obligations arising from your agreement; enforcement proceedings have been launched against you; or you fail to fulfil the obligations of other agreements entered into with the bank or its subsidiaries. In the case of Credit lines, the bank may terminate your agreement if: 18

21 you fail to meet the obligations arising from your agreement; the circumstances on the basis of which the agreement was entered into have changed (e.g. your income has decreased, you ve taken on additional obligations or you ve submitted false data); enforcement proceedings have been launched against you; or you fail to fulfil the obligations of other agreements entered into with the bank or its subsidiaries. What to do to avoid falling into debt If you encounter payment difficulties, tell us about them immediately so that we can work with you to find a way around them. This is easier in the long run, because: dealing with problems straight away will keep your costs down in future; if you don t deal with them you could make it harder or even impossible for yourself to get another loan in future, or leave the bank with no choice but to sell your collateral; and you can always apply for a break from payments. This means you can postpone repaying your loan so as to focus on solving the problems causing you the difficulties. We ve put together a special website for clients which suggests ways of getting around the problems, offers advice on family budgeting and saving and has lots of other useful tips. PLEASE THINK CAREFULLY ABOUT EVERYTHING YOU VE READ AND MAKE SURE YOU UNDERSTAND WHAT APPLYING FOR PERSONAL FINANCING INVOL- VES. IF YOU HAVE ANY QUESTIONS, OUR STAFF WILL BE HAPPY TO ANSWER THEM. 19

22 Not satisfied with a decision we ve made? If you disagree with one of our decisions or you d like further explanations, you have the right to apply for a review. Please send us a written application setting out why you re unhappy with the decision we ve made and why you think it should be reviewed. We ll reply to your application within 10 days. You also have the right to file complaints about us with the Consumer Protection Board or the Financial Supervision Authority. We ll be happy to help you if you need further details from the bank in order to do so. Wherever possible, disputes between clients and the bank are resolved by coming to an agreement. If an agreement can t be reached, the dispute is ruled on by a conciliation body (such as a consumer claim commission or a court). If the client and the bank are unable to come to an agreement in terms of how unfulfilled obligations are to be paid, the bank takes the matter to court. In such cases, the court costs are added to the bank s claims. If a court ruling requires the services of a bailiff, enforcement costs are added, depending on the size of the claim, which must be paid by the client. 20

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24 Credit cards, personal loans and Credit lines are offered by Swedbank AS and leasing is offered by Swedbank Liising AS. Read the terms and conditions of these services online at or ask about them at your nearest branch. If you have any questions, call our counselling centre on or info@swedbank.ee.