New Restrictions Coming to Turkey's Interest-Free Financing
In recent years, due to high bank interest rates and tightening credit facilities, interest-free savings finance companies have become the primary focus for citizens. There are claims of comprehensive regulatory preparation being conducted for this massive sector, known as the 'Home' system, which has a daily turnover of billions of lira.
Restrictions are being introduced to the 'Home' system. What will change in the 'Home' system?
According to the new draft being discussed in the market, restrictions are anticipated to come into effect from October 1, 2026, which will impose a limit on the number of contracts for individuals participating in the system. With the planned regulation, it will be prevented for the same person to make contracts for multiple vehicles. In the new period, a participant will be able to have a maximum of one vehicle finance and one home or roofed workplace finance contract. The total number of active contracts of a participant will not exceed two.
In addition to the restriction on the number of contracts, there are also plans to set an upper limit on the financing amounts. According to claims, the maximum vehicle finance amount that can be provided through the system will be limited to 6 million 250 thousand lira; while the upper limit for home and workplace financing will be 62 million 500 thousand lira. The total amount of all financing contracts a person is involved in will also not exceed 62 million 500 thousand lira.
How will the payment and delivery be handled?
In the current practice, savings finance companies demand an organization or service fee amounting to approximately 7% of the requested financing amount. Apart from this, no additional costs are incurred beyond legal fees such as title deed tax, mortgage expenses, and vehicle transfer costs paid to the government. Participants can determine their terms by choosing between payment options with or without down payments.
In the existing system, one of the main criteria set to access financing opportunities is the payment of 45% of the total cost. For instance, a participant entering the system for the purchase of a vehicle worth 1 million lira, after paying a service fee of 70 thousand lira, reaches a savings of 450 thousand lira through down payments or installments. The remaining amount of 550 thousand lira is then paid by the company and the vehicle is delivered. If this 45% savings amount is paid in cash or in installments within the first 6 months, financing can be utilized at the end of the 6th month.
How is the car payment calculation done in the 'Home' system?
The system offers a maximum term of 60 months for car purchases and 120 months for home purchases. Here are some example calculations:
With a 12-month term, the monthly installment would be 83,333 lira and the delivery right would be earned after the 45% payment is completed by the 6th month.
For a 24-month term, the monthly payment drops to 41,666 lira, with the right to receive the car being earned in the 11th month.
In the case of a 36-month term, the monthly payment would be 27,777 lira, with the opportunity for delivery arising in the 16th month.
Lastly, for a 60-month term, the monthly payments would be 16,666 lira, with the car delivery occurring in the 27th month.
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