Flash credit providers often not clear about high fees

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Linda, Marketing and Communication Advisor
Published on 17 April 2023

Do you need money fast? Taking out a flash credit (also known as mini-loan or payday loan) may seem like an attractive solution. But please pay close attention to the additional terms and conditions before taking out the loan. Flash credits are often not as attractive as they first appear.

A young woman with an expression of confusion or puzzlement, with her eyebrows furrowed and her lips pursed. She is touching her chin lightly with her right index finger.

Flash credits

A flash loan (or mini-loan) is a loan of thirty to a few hundred euros to be taken out quickly and easily. Such a loan has a short repayment term of a few weeks or months. There are several lenders offering these quick mini loans.

Fees

Lenders in the Netherlands are subject to capped fees and percentages regarding loans. The amount of the maximum cost is determined by the government. In 2023, this amounts to a maximum of 12% of the loan. This includes almost all costs and fees. Examples of these fees include: 

  • the interest
  • the fees for overdue repayment
  • the fees for (mandatory) collateral or guarantees

Lenders of flash loans sometimes charge much higher fees, even if this is not permitted by law. Additionally, the fine print is not always clear and consumers find it difficult or impossible to cancel the loan during their cooling-off period.

Monitoring

Dutch providers of mini loans must abide by Dutch rules. For example, they must:

  • be duly licensed for the financial market
  • be transparent about costs and fees
  • adhere to the capped fees and percentages (12% of the loan)
  • check whether the loan can be granted responsibly (BKR test)

In the Netherlands, the Financial Markets Authority (AFM) monitors whether providers of flash loans comply with these rules. 

Foreign flash lenders

Several flash loan providers from other EU countries are offering loans to Dutch consumers. These providers are not subject to the AFM's licensing requirements. However, they must be licensed in their country of registration. These foreign flash lenders must further adhere to Dutch rules when lending money to Dutch consumers.

Template letters

Have you taken out a flash loan? Are you being charged more fees than permitted by law? Were you not clearly and fully informed about the terms of the loan? Then let the lender know that they are not in compliance and that is why you want to cancel the agreement. You can use our sample letter: cancel (flash) loan agreement due to deception.

Help

If you have a complaint about a flash lender or the lender's practices, there are several organisations you can contact about your complaint: 

  • Did the lender charge excessive fees? If so, report your complaint to the AFM. Use the contact form or call the Financial Markets hotline.
  • Do you have a complaint about a company in another EU member state, Norway or Iceland? Please contact FIN-NET. This network helps consumers resolve financial services disputes out of court. Is FIN-NET unable to help you? Then you can contact the European Consumer Centre (ECC). Please note that the ECC does not specialise in financial services. For this reason, our legal specialists will not be able to help you in all specific situations.
  • Or do you have another complaint, for example regarding inappropriate or unclear conditions? Then you can contact ACM ConsuWijzer (Consumer Reference).