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Precautions when applying for a loan

Lending in Portugal is reserved for the entities that have been authorised for the purpose (see Article 4 (1) of the Legal Framework of Credit Institutions and Financial Companies).

The entities that grant credit in Portugal shall be subject to special registration with Banco de Portugal.

The contracting of financial products or services and the delivery of any amounts under such contracts should always be preceded by careful verification of the legitimacy of the entities offering the general public such products or services, in particular, by previously consulting the list of registered institutions, thus authorised to carry out financial activity in Portugal, available on Banco de Portugal's website.

Consumers should pay special attention to the following situations, which may indicate fraudulent credit-granting practices or lending by unauthorised entities:

  • promise to grant credit at interest rates below market value;
  • promise to grant credit without asking for collateral;
  • requests for cash payments (to cover administrative costs, credit plan preparation expenses, payment of insurance, fees and expenses inherent in the granting of the loan, etc.) – after the details allegedly necessary for the conclusion of the loan agreement have been requested and the draft contract to be concluded and respective conditions have been provided – but before the contract has been signed and the funds transferred to the consumer’s account;
  • proposals for the conclusion of simulated contracts for the purchase and sale of real estate, with repurchase option, for a much lower price than the property value and market price;
  • credit-granting proposals, requiring as a counterpart post-dated cheques written by the consumer, or by a third party on behalf of the consumer, usually with a value equal to or less than EUR 150.