In a provincial court decision involving a neighbor of Toro and a banking institution, Santander Consumer Finance was ordered to refund the interest it had collected on a financing loan obtained through a revolving credit card. The case centers on a purchase made through this card and the interest that accrued over time, highlighting how revolving credit can affect the total cost of a loan.
The subject of the dispute is a woman who, in 2014, used a Wizink card to finance an installment purchase. The contract carried an interest rate that started at 26.82% and rose to 27.24% by the time the case was brought. This raises questions about how much interest is allowable in revolving loan agreements and whether rates escalate beyond what is legally permissible.
What is a revolving loan?
A revolving loan, commonly referred to as a revolving or renewable credit line, allows the credit limit to be replenished as repayments are made. Because installment payments are often small, the overall debt and the interest paid can grow, while the borrower frequently pays only a modest portion of the principal. The combination of a relatively high interest rate and slow principal reduction can lead to a long repayment period. Revolving cards are often used by individuals who have limited access to more favorable lending terms and are therefore charged higher interest rates.
case of toresana
In the Toresana case, the State Court recalculated the card contract terms, determining that the interest charged was excessively high and disproportionate. The initial ruling favored the bank, but the Provincial Court later partially upheld the appeal filed by Valladolid law firm Don Recuperador on behalf of Toresana. It ordered Santander Consumer Finance to refund the accrued interest and cover first-degree costs. The bank still has the option to appeal the decision to the Supreme Court.
The Provincial Court declared the interest stipulated in the card contract null and void, invoking Usury Law which aims to cancel contracts with interest that is markedly above market rates. This aligns with established jurisprudence from the Supreme Court, which holds that normal monetary interest is determined by market conditions and regulator data rather than a creditor’s preferred figure.
The case references Bank of Spain statistics, which show the regulator’s role in compiling monthly averages for different loan types. For consumer loans secured by revolving cards, the annual average interest hovered around just above 20% in 2014. The Toro Court noted that a six-point gap between this average and the interest charged to the eighth income group on the disputed purchase did not tips the scale toward usury, according to the court’s reading of comparable cases.
However, the County Court concluded that 20% per year could still be considered very high, depending on specific circumstances of revolving credit arrangements. For example, these lines of credit are often issued quickly by credit institutions without a rigorous verification of the borrower’s ability to repay. Following Supreme Court precedent, the Provincial Court observed that interest rates three or four percentage points above the average are sometimes deemed usurious in revolving credit scenarios.
Overall, the Toro decision reflects a nuanced approach to consumer credit: while actual practice varies by jurisdiction, regulators and courts increasingly scrutinize the fairness of high revolving-card rates and consider whether such terms exploit borrowers who may not have access to more favorable financing options. The outcome underscores the importance of transparent disclosures and the alignment of contract terms with market norms and legal standards that safeguard consumers from disproportionate charges. The case continues to be cited in discussions about the legality of high revolving-card interest rates and the balance between lender risk and consumer protection [Source: court records and regulator data].