Student loan information sheet

Bank

AS LHV Pank
Phone: 6-800-400
Tartu mnt 2 Tallinn 10145
lhv@lhv.ee
www.lhv.ee

Main features of the loan

Type of loan: state-guaranteed student loan

Loan amount and currency: in 2022/2023, the maximum amount of the student loan is 1,500 euros per borrower whose period of studies according to the curriculum is 6 to 8 calendar months, and 3,000 euros per borrower whose period of studies according to the curriculum is 9 calendar months or more.

The Government of the Republic establishes the maximum amount of the student loan once per year. The bank informs the borrower each academic year of the maximum amount of the student loan, the application and issuing procedure and deadlines through the media before 1 September. The student loan can be received in the maximum amount on each level of education for as many times as the nominal duration of studies is at the corresponding level of education. If the borrower has received the state-guaranteed student loan at the same level of education during previous studies, the number of times they are entitled to a student loan is reduced by the number of times the student loan was previously received.

Duration of the loan agreement: the duration of the loan agreement is related to the nominal time of the borrower’s studies and/or the actual period of eligibility for the student loan. The borrower must commence repayment of the loan amount no later than 18 months after finishing their studies due to the completion of the curriculum in full or leaving the educational institution for another reason, unless they have continued their studies during this time while being eligible for the student loan.

The borrower undertakes to repay the full amount of the loan together with interest if they finished their studies due to completion of the curriculum in full and to repay the loan amount within a period of double the nominal duration of the curriculum, calculated from the beginning of repayment; or, in the case that they finished studies for another reason, to repay the loan amount within a period of one and a half times the duration of their studies at the educational institution, calculated from the beginning of repayment, but not less than 6 months, and not longer than one and a half times the nominal duration of the curriculum.

If the borrower has continued their studies whilst eligible for the student loan within 12 months of finishing their studies, they undertake to repay the entire loan amount, together with interest, during the period calculated from the beginning of repayment and received by adding up the calculated periods according to the foregoing, but not longer than within a period of 20 years.

Type of interest rate applicable: 6-month Euribor + 1.95% per annum. The calculation of interest starts from the day of transfer of the student loan, and ends on the day of full repayment of the loan amount to the bank. When calculating interest, the bank is guided by the actual number of days in the calendar month and a 360-day year.

Euribor (Euro Interbank Offered Rate) is the EUR base rate established by the Eurozone banks for each interest period, equivalent of the EUR deposit interest rate for 6-month deposits, established on the day of change of the Euribor (published on the corresponding website of Telerate or Reuters or on another official website). The current Euribor rates are also available on the bank’s website.

In the event that the EUR base rate for 6-month EUR deposits established by Eurozone banks on the Euribor change date agreed on in the loan agreement is less than 0% per annum or negative, the Euribor rate is calculated as 0% per annum on the corresponding day of change of the Euribor.

Required security: fulfilment of the obligations of the borrower arising from the loan agreement guaranteed by a surety of at least one Estonian citizen or a person staying in Estonia on the basis of a residence permit or permanent right of residence, or a mortgage on real estate located in Estonia. The bank has the right to demand the provision of supplementary security if this is required by the laws of the Republic of Estonia or by legislation established by the Government. If the value of the security has decreased (incl. there has been a deterioration in the economic situation of the borrower’s surety) or the surety has died, the borrower must immediately provide supplementary security in favour of the bank after the relevant circumstance has occurred.

The bank must inform the loan applicant immediately and free of charge about the results of a database query if, as a result of the query, it is decided not to grant a loan to the applicant. Information received from databases is not transmitted if the transmission of such information is prohibited by law or is contrary to public order or security purposes.

Interest rate and other expenses

The annual percentage rate of charge is the total cost of a loan, expressed as an annual percentage. The annual percentage rate of charge can be used to compare different offers. The initial annual percentage rate of charge expresses the annual burden of expenses (interest, agreement fee) arising from the borrower’s first student loan and is published as a percentage of the first student loan, provided that the borrower immediately and fully takes advantage of the first student loan, and that it is repaid over a period of 1 year in 12 equal instalments at equal intervals. The initial annual percentage rate of charge does not include the insurance costs of the immovable property provided as security or the cost of providing the security (notary fee and state fee).

The initial annual percentage rate of charge is 2.633% under the following example terms: the loan amount is EUR 3,000, the interest is 6-month Euribor + 1.95% per annum, contract fee EUR 0, the loan period is 129 months, of which the first 48 months fall under a grace period for the principal.

The total amount to be repaid is EUR 3,615.62, with payment taking place in the form of monthly annuity payments.

This includes the interest rate: 6-month Euribor + 1.95% per annum.

This annual percentage rate of charge is calculated on the basis of the expected interest rates (Euribor rate).

Since the student loan is a loan with an unfixed interest rate, the actual annual percentage rate of charge may differ from this annual percentage rate of charge if the loan interest rate changes. For example, if the interest rate rises to 5% per annum due to a change in the Euribor rate, the annual percentage rate of charge may increase to 5.113% per annum.

The following costs are not known to the bank, so these have not been taken into account when calculating the annual percentage rate of charge: notary fees and state fees related to the provision of the security, and expenses related to insurance of the property serving as the security.

Repayments and schedule

Frequency of repayments: repayments take place once per month on the payment date agreed on in the loan agreement.

Repayment of the loan amount and payment of interest to the bank is carried out in the form of monthly annuity payments on the dates and in the amounts specified in the schedule prepared by the bank. In the case of a schedule with annuity payments, the monthly payment payable to the bank (repayment of the loan amount and the interest payment together) remains the same from the start of repayment of the loan amount until the final date of repayment of the loan amount (except the last payment according to the schedule, which differs from other payments due to rounding). The bank prepares the schedule and forwards it to the borrower via the Internet Bank within 45 days of graduating from the educational institution or the borrower leaving the educational institution.

Until graduating from the educational institution or leaving the educational institution for another reason, the bank reduces the student loan payable each time by the interest due for the preceding period. If the bank issues the student loan in several parts, the bank will reduce every payable part of the student loan by the interest due.

The borrower must commence repayment of the loan amount no later than 18 months after finishing their studies due to the completion of the curriculum in full or leaving the educational institution for another reason, unless they have continued their studies during this time while being eligible for the student loan.

In the year when the borrower waives the student loan or does not wish to obtain the student loan before 31 October of the current academic year, or the conditions required for obtaining a student loan are not met, they must pay the interest due to the bank by 31 October of the current academic year at the latest. After graduating from the educational institution or leaving the educational institution, the borrower pays interest to the bank on the outstanding loan amount according to the schedule prepared by the bank. The first interest payment according to the schedule must be paid 3 months after graduating from the educational institution or leaving the educational institution.

If there are insufficient funds in the borrower’s current account(s) in the currency of the corresponding payment on the due dates, the bank is also entitled to deduct the amounts in other currencies by converting the amount at the borrower’s expense according to the currency transfer rates valid in the bank at the time of conversion. If there are different currencies on the borrower’s current account(s), the order of conversion of currencies is determined by the bank.

A grace period can be obtained on the bases provided by law in connection with the birth of a child, military service, or study in residency.

Repayment ahead of schedule

The borrower has the opportunity to repay the loan in full or in part ahead of schedule.

Fee for repayment ahead of schedule: none

Other rights of the borrower

The borrower has the right to withdraw from the loan agreement within 14 days from the date of conclusion of the loan agreement.

For this, it is necessary to submit, by the aforementioned deadline, a written withdrawal application to the bank, to the e-mail address of the bank specified in the loan agreement. Upon withdrawal from the loan agreement, the borrower must return the full loan amount utilised by them to the bank immediately, but not later than within 30 days from the date of submitting the withdrawal application, and pay the interest calculated from the date of utilising the loan amount until the repayment of the loan amount; otherwise, the borrower is deemed not to have withdrawn from the loan agreement.

Complaints

In the case of a complaint, please contact us by calling 6-800-400 or sending a complaint to info@lhv.ee. The complaint form can be found at the following link: Filing a complaint against AS LHV Pank.

The maximum time to process a complaint is 15 days. If a complaint cannot be resolved within the above time limit due to its complexity or for other compelling reasons, the bank will notify the borrower about the reasons for the delay and about an extended time limit for replying, using the contact details provided by the borrower.

If the bank does not resolve the complaint in an internal procedure in a way that is satisfactory to the borrower, then you can also contact the Consumer Protection and Technical Regulatory Authority (Endla 10A, Tallinn 10122, https://www.ttja.ee/ or ask the FIN-NET network (http://ec.europa.eu/finance/fin-net/index_en.htm) for details about the relevant authority in your country (if you do not live in Estonia).

Failure to fulfil obligations related to the loan: consequences for the borrower

Failure to make payments: in the case of late payments, the bank has the right to claim interest on arrears of 8% per year from the borrower, and the service fee for sending a debt notification letter to the borrower (service fee from the price list). The rate of interest on arrears may change pursuant to the Law of Obligations Act on 1 January and 1 July of each year. Upon a failure to make payments, additional costs for collection of the debt may be incurred (the fees charged by the collection service provider and/or legal costs and/or enforcement agent’s charges).

Upon a failure to make payments, the loan agreement concluded with the borrower may be cancelled.

The borrower must notify the bank in writing of the occurrence of each of the following circumstances within 5 business days:

  • leaving the educational institution (if the borrower enrolled in a foreign educational institution, then also about graduating from the educational institution);
  • a decrease in the value of the security;
  • deterioration of the surety’s economic situation or their death;
  • a change in the actual place of residence or personal data of the borrower and the surety;
  • of the borrower’s petition to a court for the restructuring of debts.

Amendment of the loan agreement: amendments and additions to the loan agreement are formalised in writing and enter into force upon being signed by the parties, unless otherwise agreed by the parties. When paying out student loans, the parties do not conclude an annex to the loan agreement each time; instead, the borrower authorises the bank to keep records of student loans made available to the borrower. The bank has the right to amend the terms of the loan agreement unilaterally if the laws and regulations governing student loans or consumer credit change, or the agreement on the organisation of granting student loans concluded between the Republic of Estonia and the bank is amended and the amendment of the loan agreement is justified by the alignment of the loan agreement with the legislation or the agreement on the organisation of granting student loans concluded between the Republic of Estonia and the bank. The bank informs the borrower in advance about the changes to the terms of the loan agreement. If the borrower does not agree to the new terms and conditions, the borrower has the right to terminate the loan agreement immediately.

Cancellation of the loan agreement: the bank has the right to refuse to grant a student loan to the borrower and/or cancel the loan agreement, requiring the immediate repayment of student loans made available to the borrower, together with interest, if:

  • incorrectness of the data submitted to the bank or falsification of documents becomes apparent;
  • the value of the securities is not sufficient and the borrower has not submitted additional documents to the bank or provided additional security in favour of the bank, if this is required by the laws of the Republic of Estonia or by legislation established by the Government;
  • the borrower is fully or partially in delay with 3 consecutive repayments of the loan amount and the bank has given them an additional 2-week term to pay the missing amount. Together with the additional term, the borrower receives a statement from the bank stating that the bank will cancel the loan agreement if the borrower does not pay the debt within the additional term;
  • the borrower violates other terms of the loan agreement;
  • the borrower does not accordingly comply with the proprietary obligations arising from contracts entered into with the bank and/or any subsidiaries belonging to the bank’s consolidation group. In the above cases, the borrower must make all payments within 20 business days of receiving the relevant cancellation notice from the bank. If the full amount due is not in the current account by the deadline, the bank will start calculating the interest on arrears. If the bank cancels the loan agreement, the costs related to judicial and/or enforcement proceedings may be added, which are payable by the borrower;
  • enforcement or court proceedings have been brought against the borrower (including a bankruptcy caution against them, or a petition to a court for the declaration of their bankruptcy by the borrower themselves or a third party).

If the borrower does not pay the interest, does not start repaying the loan amount, or fails to meet the deadlines in the repayment schedule, the bank submits the claim to the surety(-ies) or pledgor(s) or starts to dispose of the property serving as the security. If the surety(-ies) or the pledgor fails to comply with the obligations arising from the loan agreement, the bank has the right to demand that the State fulfil the obligation of the borrower or their surety or pledgor. If the State has fulfilled the borrower’s obligation to the bank, the State becomes entitled to a claim against the borrower and their surety(-ies) or pledgor.

Violation of other obligations arising from the loan agreement: violation of obligations arising from the loan agreement entails the right of the bank to demand that the borrower pay a contractual penalty in the amount of up to 120 euros.

Additional information

The loan agreement is governed by the law of the Republic of Estonia.

The information and terms of the contract are presented in Estonian. With the consent of the borrower, the bank communicates with the borrower during the period of validity of the loan agreement in Estonian, Russian, or English.

The borrower has the right to obtain a draft loan agreement prior to the conclusion of the loan agreement.

Supervisory authority

The Estonian Financial Supervision Authority (www.fi.ee) performs supervision over this bank.