Consumer rights watchdog explains borrowers' rights: solvency checks, withdrawal and early repayment
Latvia's Consumer Rights Protection Centre has outlined key borrower rights, from mandatory solvency assessments to the right to withdraw from or repay a loan early. The central bank notes refinancing can save borrowers up to €500 a year on average.
The Consumer Rights Protection Centre (PTAC) has summarized the main rights consumers have when taking out loans, based on Latvia's Consumer Rights Protection Law and related government regulations on consumer lending.
Lenders must assess ability to repay
Before issuing a loan, a lender must evaluate whether the borrower can realistically repay it, including checking public databases on income and existing obligations. If a loan is refused, the consumer has the right to learn which databases were consulted. Mortgage loans may also be denied if a borrower's debt-service-to-income ratio exceeds 40%, or if too little would remain for daily living costs after future payments.
If a lender fails to properly assess solvency and this creates extra financial burden for the consumer, the consumer can ask that the contractual interest rate be replaced with the 6% rate set out in the Civil Law. However, only a court can make a final ruling on such a claim if the lender does not agree voluntarily.
Right to information, withdrawal and early repayment
Before signing a contract, consumers must receive standardized information, with the annual percentage rate (APR) serving as the key figure for comparing offers — the lower the APR, the more favorable the deal.
Consumers may withdraw from a loan agreement within 14 days without justification, though the borrowed amount plus interest must be repaid within 30 days of sending the withdrawal notice. This right is used far less often for mortgages than for consumer loans.
Loans can also be repaid early. No compensation may be charged for loans with a variable interest rate. For fixed-rate loans where the early repayment exceeds €9,960, lenders may charge 0.5% or 1% of the amount, depending on the remaining term.
Refinancing can save hundreds of euros a year
Since February 2024, refinancing mortgage loans has become simpler and cheaper. Latvia's central bank reports that since the start of 2025, rates have been lowered on more than 13,000 loans, saving borrowers €350–500 a year on average, with total annual savings exceeding €4.6 million.
