The Central Bank drew attention to the problem of imposed services in lending back in 2015, when it introduced a “cooling off period”, during which borrowers had the opportunity to terminate the insurance contract. However, it still turns out to be difficult for them to exercise their right: financiers are coming up with different ways to refuse to return the money. At the same time, banks still remain one of the main sales channels for insurance products that they impose on borrowers. Thus, in the first half of 2021, although fees for credit insurance decreased (due to quarantine and a temporary decrease in loan issuance volumes), they still remained at a high level: RUB 39.2 billion. For comparison, for other types of insurance, this figure amounted to 15.1 billion rubles.
In order to stop the practice of imposing additional services when lending, a bill “On Amendments to the Federal Law “On Consumer Credit (Loan)” was developed. It passed the first reading and is due to be considered by the State Duma in October.
The bill contains several important innovations.
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- It is prohibited to condition the conclusion and execution of a consumer loan agreement on the need to purchase, for a fee, additional services provided by the lender or third parties.
- The obligation of the lender, in the event of a violation of the borrower's right to free choice of services, to pay the consumer compensation in the amount of double the costs incurred by him to pay for additional services within ten working days from the date the client submits this demand.
- It is impossible to oblige a borrower who has received a loan for a period of more than a year to enter into a voluntary insurance agreement for the entire loan period, which provides for a one-time payment of insurance payments.
Considering that the practice of actively promoting additional services that are useless for consumers and charging fees is currently widespread (as shown by regular monitoring of the state of protection of the rights of consumers of financial services conducted by ConfOP - the International Confederation of Consumer Societies), these amendments seem timely.
The banking lobby opposes the innovation. The Association of Banks of Russia sent a letter to the head of the State Duma Committee on the Financial Market, Anatoly Aksakov. It states that the bill could create the risk of “additional card services being deemed illegal,” and that “individual clients, in order to generate income, may specifically appeal to financial institutions, regulatory authorities and the court to challenge any additional services.”
According to media familiar with the document, financiers are most worried about the impact of the new regulations on the credit card segment.
Methods of refusal
In order not to overpay extra money and not follow the lead of the credit institution, you can use one of three methods.
They show how you can completely legally refuse life insurance with a car loan:
- Refuse insurance when purchasing a car on credit, at registration.
- Write applications to the bank.
- Go to court with a statement of claim , informing that when applying for a car loan, life insurance is imposed.
Let's consider each of these methods separately.
Find out how you can get a car loan without life insurance and without CASCO, and even with government support
Before signing documents
You can refuse life insurance when applying for a car loan right when signing the relevant documents.
To do this you need to know the following:
- According to Art. 16, paragraph 2 of the Law “On Protection of Consumer Rights”, legal entities do not have the right to insist on purchasing additional products. services when purchasing the main service, that is, a car loan;
- Art. 14.8.2 of the Code of Administrative Violations states that in case of violation of the law “ On the Protection of Consumer Rights”, legal entities are required to pay an administrative fine.
- In Russia, life insurance is an absolutely voluntary service. This is stated in Art. 935 of the Civil Code: “the obligation to insure one’s life or health cannot be imposed on a citizen by law”
If a buyer takes out a car loan at a bank, and the credit manager continues to stick to his line regarding mandatory insurance, then it is necessary to call a senior employee.
It will help resolve the issue of imposing insurance.
If this happens at a car dealership, then you need to contact the partner bank of this dealership.
Through control authorities
If the claim does not bring results, we file a complaint against the insurance organization with Rospotrebnadzor, the Central Bank of Russia or the Russian Union of Auto Insurers (it is better to do this at the same time).
Why do many people take out life insurance on a car loan if it is voluntary?
To do this, you will need to indicate in the application a link to a violation of consumer rights, a description of how salon managers impose life insurance on a car loan, and a request to refuse insurance on a car loan.
If the listed organizations reveal the fact of imposing life insurance services, the bank will be fined.
If the bank or insurance organization does not eliminate the violation, there is a risk of losing the license.
Of course, none of the institutions will allow this and will rather settle accounts with the client.
Through the court
The third way to refuse life insurance for a car loan is to go to court. It is necessary to collect a package of documents to file a claim, consisting of:
- loan agreements;
- insurance policy;
- bank refusal in writing, or audio/video recording.
There is an important nuance that the borrower should take into account - the need to provide evidence that the insurance service was imposed. Recording a conversation with a manager on a voice recorder is an excellent way to solve such a problem.
Since the article is devoted to issues of refusal at the time of registration, and not after receipt, this point is described briefly. For information about refunds after registration, during the cooling-off period, or for early payment, please continue reading the article.
Imagine if you knew how to pay back life insurance on a car loan within 14 days, you wouldn’t have to wait for early repayment!
More options
You can also refuse life insurance for a car loan if the loan has been repaid regularly within six months.
To do this you need to do the following:
- Contact the bank's credit department;
- Make a written request to terminate the insurance contract;
- Wait for the bank's response.
In many cases, financial institutions respond positively to such requests from clients, if there are no late payments for the entire period and there are no insurance cases.
Then the bank recalculates interest rates and increases them to compensate for the risks.
A financial institution can carry out recalculation only if this is provided for in the agreement. Otherwise, the client will refuse his request.
I believe - I don't believe
Most often, when applying for a consumer loan, banks impose life, health and job loss insurance. According to the types of contracts concluded, we can distinguish an individual insurance contract and a collective insurance contract, in which the bank insures you.
No type of insurance is required when taking out an unsecured personal loan. Despite this, according to the “People's Rating” of the Banki.ru portal, in the total mass of complaints from clients of retail banks, the share of requests regarding fraudulently imposed insurance is about 30%.
“In theory, insurance protects both parties—the lender and the borrower. For the borrower, this is protection in case of unfavorable situations; for the lender, it is an additional guarantee of money back,” explains expert of the Ministry of Finance project “Promoting the level of financial literacy of the population and the development of financial education in the Russian Federation,” economist Sergei Trukhachev.
You have every right to refuse insurance when concluding a loan agreement. But in reality everything is not so simple. “A bank employee will not tell you that you won’t get a loan without insurance, but he can tell you that if you are insured, then one interest rate applies to you, and if you are not insured, then another. This is absolutely legal,” recalls Trukhachev.
To obtain the client’s consent to take out insurance, bank managers, as a rule, offer a reduction in the loan rate, agrees Elena Sudarikova, head of the banking services analysis department of the financial supermarket Banki.ru. “Since people have already learned to count money, such a proposal works less and less often. A simple calculation shows that sometimes it is more profitable to take out a loan at a higher rate than to take out expensive insurance,” says Sudarikova. Therefore, according to her, banks are increasingly encouraging clients to agree to insure themselves against a possible refusal to issue a loan.
Bank managers offer a lower loan rate when purchasing insurance, but this is not always profitable
In this situation, you can safely file a complaint with the Central Bank or Rospotrebnadzor, and the situation will definitely be resolved in favor of the client, Trukhachev is sure. The fact is that the Law “On the Protection of Consumer Rights” prohibits making the purchase of some goods or services conditional on the purchase of others. There are no exceptions here. “On the other hand, the bank has the right to refuse to issue you a loan without any explanation at all - and then you will not be able to complain about its actions as the imposition of some additional services,” Trukhachev warns.
In reality, at the stage of applying for a loan from a bank, it is almost useless to declare that imposing insurance is illegal, notes Sudarikova. Clients' appeals to legislation usually do not find a response from bank employees. “As a rule, bank employees answer: “The bank does not approve loans without insurance.” This is most likely not true: insurance does not affect loan approval. But the answer: “The director of our branch does not allow us to issue loans without insurance” is much closer to the truth. But the client can’t do anything here,” says Sudarikova.
Many clients agree to insurance, planning to refuse the imposed service after receiving a loan. In this case, the borrower, according to the terms of the loan agreement, is obliged to notify the bank of his decision. “And since there has been a significant change in circumstances compared to the terms on which the agreement was concluded, the bank will have the right to change the conditions for issuing a loan to you, in particular, to increase the interest rate. If you did not notify the bank, but it still found out about it, then the bank may demand both early repayment of the loan and payment of increased interest,” explains Trukhachev.
According to Sudarikova, the most effective way to avoid imposed insurance is to refuse a loan with insurance and try your luck at another bank.
Partially solving the problem could be the extension of the “cooling off period” (14 calendar days from the purchase of insurance, when the client can refuse it) to group insurance contracts, she argues. This is exactly the kind of agreement that retail banks are now imposing. But so far this idea is only at the stage of discussion in the expert community.
And if the borrower agreed to the imposed insurance, then he will have to pay real money for an unnecessary service. How much is this in numbers? For clarity, we give an example of calculating an overpayment on a loan from one large retail bank. Consider a loan of 400 thousand rubles at 13.5 percent per annum. Over five years, the borrower will overpay 152 thousand rubles, and the monthly payment will be 9.2 thousand. With insurance, without which in practice it is almost impossible to get a loan from this bank, the overpayment will be about 271 thousand rubles, and the monthly payment will be 11.2 thousand, Elena Sudarikova calculated.
Does this mean that the insurance that the bank offers when issuing a loan is an imposed service that should be refused in any case? Oksana Shuranova, financial literacy consultant for the Vashifinansy.rf project, disagrees with this statement. In her opinion, there are situations when insurance would be very appropriate: “If the loan amount is significant and it is taken out for a long period, then insurance should not be refused. Unforeseen situations may occur in life and at work - illness, loss of ability to work, dismissal. In this case, the insurance company will pay the loan, not your relatives. If the loan amount is small - 1-2 of your monthly income, and you take it out for no more than a year, it is advisable to refuse insurance.”
Remember that insurance gives you protection. If you, having once again assessed everything sensibly, change your mind, then you can refuse it during the “cooling period”.
Consequences of failure
Refusal of life insurance may become an unspoken reason for refusal to provide a car loan. Or the bank will increase the interest rate on the loan.
Thousands of Russians are confused about whether life insurance is necessary for a car loan, let’s look into the issue
Many managers “intimidate” clients with the idea that their credit history may deteriorate if they refuse to take out insurance.
It's important to remember that this is not true.
If such a situation does occur, then you can safely call the manager’s manager and try to explain the situation.
There are often cases when the interest rate remains the same, but the loan amount is significantly reduced. This is another tool of pressure on the borrower in order to force him to “voluntarily” enter into an insurance agreement.
Is it possible that a car dealership can recover a discount through the court if it refuses insurance?
Unfortunately yes. We managed to find 8 different court cases from 4 regions (St. Petersburg, Leningrad region, Arkhangelsk, Murmansk), and 7 of them ended in favor of car dealerships. 7 cases out of 8 were initiated by car dealerships: buyers were sent pre-trial claims, but they refused to voluntarily compensate the car dealership for the amount of the discount. Most of the decisions were appealed and upheld: there is no information about appeals in only 2 cases. One client of the car dealership even filed a complaint with the Supreme Court of the Russian Federation, but they did not take his case for review.
Legal advice
Before or after signing the contract, so that you can refuse life insurance if you have auto insurance, lawyers advise you to remember the following:
- To return the insurance premium in full, you must write an application for termination of the contract even before it begins, that is, on the day of registration.
- The conditions for granting a car loan may change for the worse after refusing life insurance both before and after signing the contract.
- In order to protect yourself in court in the event of filing an application for refusal of life and health insurance for borrowers, many insurance and credit organizations stipulate the conditions for the return of funds by the client directly in the contract.
Situations involving the imposition of insurance during loan processing have occurred and will occur again.
To avoid this and not become another victim of the “fine” print in the contract, you need to carefully read it and follow the advice given in this article.
If the borrower gets in the way of a very persistent manager who is trying with all his might to sell him a policy, then lawyers will help him refuse life insurance for a car loan in this situation.
How to return life insurance after taking out a car loan? Read ►►
Is it possible to invalidate an agreement with a car dealership?
In 4 cases, the car dealership's customers tried to bring such a claim - separately or as a counterclaim in the case brought by the car dealership - but the courts found no grounds to invalidate the discount agreements. Buyers believe that they signed an additional discount agreement under the influence of deception and misconception. The judges note that the buyers do not confirm their words in any way; they signed the papers voluntarily and, in general, consistently fulfilled all the conditions for providing a discount specified in the agreement. In one case, prejudice also prevented a car dealership client from challenging a discount agreement.
The Axel City car dealership filed a claim to recover a discount from its client Oksana and won (case 2-304/2018 Monchegorsk City Court, upheld by the Murmansk Regional Court in case 33-2454-2018, the Supreme Court of the Russian Federation refused to transfer the complaint for consideration ). After the decision in this case, the buyer filed a lawsuit to protect consumer rights and invalidate the discount agreement (case 2-3250/18 Pervomaisky District Court of Murmansk), but lost. The courts referred, among other things, to a previously made decision to recover the discount, which, according to Art. 61 of the Code of Civil Procedure of the Russian Federation is binding (appeal ruling 33-3492/2018 Murmansk Regional Court).
Why do the courts side with car dealerships? Is this a hoax?
In court decisions you can find 5 main reasons why the courts take the side of the car dealership.
Car dealerships do not offer insurance
In one of the decisions, the judge writes that when offering a discount on a car, a car dealership lacks an “element of benefit,” so its actions cannot be considered an imposition of a service. Taking out insurance is not mandatory under the terms of the purchase and sale agreement, and the car dealership itself is not a party to the insurance agreement. The buyer has a choice - to buy a car without insurance at full price or at a discount, but subject to additional insurance conditions.
See the case “Autocentre Maximum” against Butrekhin 2-3211/18 Moskovsky District Court of St. Petersburg, there is no information about the appeal.
The discount covers the insurance
Another judge compared the amount of discount provided and the cost of insurance. The buyer received a discount of 498 thousand rubles, of which 255 thousand were given in connection with the purchase of insurance. The insurance policy cost exactly 255 thousand rubles, that is, in fact, the car dealership, with its discount, reimbursed the client for all expenses for obtaining insurance. Considering that the total discount exceeded the insurance premium by almost 2 times, even if you take out insurance, the purchase cannot be considered unprofitable.
See Kirichenko’s case to “Autocenter Maximum” 2-363/2016 Zelenogorsky District Court of St. Petersburg, upheld by appeal ruling 33-8389/2017 of the St. Petersburg City Court.
The buyer signed everything himself
Judges pay attention to the fact that the buyer first signs a purchase and sale agreement and an additional discount agreement, then he consistently fulfills their terms - takes out one or more insurances to reduce the selling price of the car. Subsequent refusal of insurance naturally leads to the fact that the received discount must be returned.
See the case "Vostok-Avto" v. Ulakhovich 2-326/2018 Sosnovoborsky City Court of the Leningrad Region, upheld by appeal ruling 33-6020/2018 of the Leningrad Regional Court.
By refusing insurance, the buyer violates the terms of the contract
The judges remind you that according to paragraph 1 of Art. 485 of the Civil Code of the Russian Federation, the buyer has the obligation to pay for the goods at the price stipulated in the purchase and sale agreement. Due to the registration of insurance and the provision of a discount, the client pays for the car at a lower price. Cancellation of a previously provided discount for canceling life insurance is provided for in the contract and is caused by the fact that the buyer has violated its terms.
See the case “Axel-Renord” against Shevchenko 2-2950/2018 Oktyabrsky District Court of Murmansk, there is no information about the appeal.
The contract provides for the possibility of changing the price
The Civil Code of the Russian Federation allows changing the price of a contract after conclusion in those cases and on the conditions that are provided for by the contract itself or by law (clause 2 of Article 424 of the Civil Code of the Russian Federation). The car dealership and the buyer specify such cases of price changes in an additional discount agreement. It also contains conditions under which the price can change - both when a discount is provided and when it is cancelled. This means that the requirement to return the discount if these conditions are violated is legal.
See the case “Axel-Norman” to Golubin 2-4075/2018 Oktyabrsky District Court of Murmansk, upheld by appeal ruling 33-1632-2019 of the Murmansk Regional Court.
Are there ways to avoid returning the discount to the dealership?
Unfortunately, judicial practice confirms that it is unlikely that you will be able to get your insurance money back and keep the discount on your car at the same time. But there are a couple of options that can help the dealership customer.
Settlement agreement
Theoretically, it is possible to reach an agreement with a car dealership during the process of considering a claim, at the stage of appeal or even enforcement proceedings. It all depends on your ability to negotiate and the position of the car dealership.
St. Petersburg resident Artemy, by decision of the Kirov District Court (case 2-2337/2017), had to pay the Autocenter Maximum car dealership 300 thousand rubles to compensate for the discount due to refusal of insurance. The man appealed the decision, and during the appeal he managed to conclude a settlement agreement with the car dealership (case 33-7392/2018, St. Petersburg City Court). Unfortunately, the determination to terminate the case has not been published, so we can only guess what the client and the car dealership agreed on. Perhaps the buyer reinstated the insurance in order to maintain the discount, or the car dealership agreed to reduce the amount of the required refund discount provided the debt was repaid immediately.
Discount conditions met
All car dealerships using the insurance-discount scheme have different conditions for providing discounts. Some salons give a discount when you take out 2 insurances (life, CASCO) and trade-in your old car. Others may offer a discount only for taking out one of the offered insurance policies to choose from. It all depends on the terms of the purchase and sale agreement and the additional agreement with the car dealership. Here is the only case that the Cat Lawyer found that ended in favor of the buyer.
A resident of Severodvinsk, Daria, had the following written down in her agreement with the Axel-Arkhangelsk car dealership: a discount of 406 thousand rubles. for Volkswagen Tiguan is provided subject to compliance with any OR all three conditions (voluntary insurance, property insurance, trade-in). The court stated: even if she refuses life insurance, the woman still has the right to receive a discount, because she continues to have the CASCO insurance issued through the salon (case 2-271/2019 Severodvinsk City Court). The car dealership filed an appeal, but it was not satisfied (case 33-2693/2019 Arkhangelsk Regional Court).
Do not rush to rejoice: this decision is rather an exception to the general rule. In two cases that are mentioned in our article, there were similar terms of the discount agreement, but the court sided with the car dealership. So it will be extremely difficult to outwit the car dealership, get the insurance cost back and keep the discount on the car. Your most reliable ally in the fight against car dealerships has been and remains your attention: be vigilant when choosing an official dealer and read everything you sign from cover to cover.
