From Iceland — Supreme Court Rules Loans Pinned to Foreign Currency Illegal

Supreme Court Rules Loans Pinned to Foreign Currency Illegal

Published June 16, 2010

The Supreme Court of Iceland ruled just moments ago that car loans pinned to foreign currency – which has subsequently put many families in deep financial debt – were in fact illegal.
Two cases were connected to the ruling involving car loans taken from the companies Lýsingu hf. and SP-fjármögnun that were pinned to foreign currency. With the collapse of the Icelandic crown in 2008, many people who took out such loans – at a time when the crown was strong – saw their debts double almost overnight.
Consumer spokesperson Gísli Tryggvason told Vísir that he was “very pleased” with the ruling. He added that many people who had taken these loans had probably paid more than they even took out in their initial loans, so he expects these people to get money back.
Gísli believes the next step will be to examine real estate loans that were structured similarly. In the meantime, he says, “Consumers have been acquitted.”

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