The Croatian National Bank has warned consumers about paid guarantees linked to online loans, following numerous queries about Multitude Bank plc, which is headquartered in Malta and operates in Croatia under the Ferratum name. Recurring guarantee charges and additional fees following payment defaults can increase borrowing costs beyond the charges under the loan agreement itself.
Croatian law permits consumers to pay a person or company to act as their guarantor. This creates a separate contractual relationship, leaving consumers responsible for obligations under both the loan and guarantee agreements. Guarantee fees are payable regularly and independently of loan repayments, while payment defaults trigger automatic extensions with additional fees. Consumers should examine these terms carefully and assess total borrowing costs by including interest, credit approval charges, guarantee fees and any guarantee extension fees.
The central bank does not supervise consumer protection in the selection of guarantors or contractual relationships between consumers and guarantors. Complaints about the conduct of a legal entity established in another European Union member state may be submitted to the State Inspectorate. The warning also reiterates that the central bank cannot provide the same level of consumer protection monitoring for customers borrowing from banks headquartered in other member states as it does for customers of banks headquartered in Croatia.