Countries › Paraguay › Guide › 16. What is normal abroad but not here › Interest rate ceiling and penalty free prepayment
Interest rate ceiling and penalty free prepayment
Last verified: 2026-10-28 · Status: Stable
Abroad, lenders usually price interest freely and charge prepayment fees. In Paraguay, compensatory and punitive rates are usurious above 130 percent of the Central Bank's average consumer credit rate for the term and currency, and card rates are capped at three times the average deposit rate. Consumers may prepay credit at any time with no penalty.
USD figures use PYG 5,868.31 per US dollar, the Banco Central del Paraguay reference quotation for 28 October 2026 (planilla de cotizaciones). Conversions are for orientation only.
Key facts
| Usury threshold above the average consumer credit rate | 30 %Ley 489/1995 art. 44 (Ley 2339/2003), as of 2003-12-26 · in force |
|---|---|
| Maximum punitive interest as share of the default rate | 30 %Ley 489/1995 art. 44 (Ley 2339/2003), as of 2003-12-26 · in force |
| Credit card rate cap as a multiple of the average deposit rate | 3 timesLey 5476/2015 art. 9, as of 2015-08-25 · in force |
| Penalty allowed on consumer credit prepayment | none textLey 1334/1998 art. 30 (Ley 6624/2020), as of 2020-11-04 · in force |
| BCP reference rate, PYG per US dollar, 28 October 2026 | 5868.31 PYGBCP planilla de cotizaciones, as of 2026-10-28 · in force |
The rule
1. Usury ceiling. Interest rates are set freely by supply and demand within limits. Compensatory and punitive rates are usurious when their effective rate exceeds by 30 percent the average effective annual rate charged by banks and finance companies on consumer credit, by term and currency. The Central Bank defines consumer credit, terms and currencies and publishes the rates monthly in two national newspapers.
Cost to do it: No fee; the limit caps pricing.
Example: Illustration only: if the published average for a term and currency were 20 percent, the cap would be 26 percent, so interest on PYG 100,000,000 for one year could not exceed PYG 26,000,000. / On US$17,041 of principal, at most about US$4,431 of interest.Ley Nº 489/1995, Central Bank charter, art. 44 as reworded by Ley Nº 2339/2003 (promulgated 26 December 2003), Ley 489/1995 art. 44 (text given by Ley 2339/2003 art. 1), 2003-12-26 official text · verified 2026-10-28
Cost to do it: No fee; the limit caps pricing.
Example: Illustration only: if the published average for a term and currency were 20 percent, the cap would be 26 percent, so interest on PYG 100,000,000 for one year could not exceed PYG 26,000,000. / On US$17,041 of principal, at most about US$4,431 of interest.Ley Nº 489/1995, Central Bank charter, art. 44 as reworded by Ley Nº 2339/2003 (promulgated 26 December 2003), Ley 489/1995 art. 44 (text given by Ley 2339/2003 art. 1), 2003-12-26 official text · verified 2026-10-28
2. Default interest. From default, compensatory interest becomes default interest at no more than the agreed rate, calculated on the overdue balance. A punitive surcharge may be added, at no more than 30 percent of the default rate, also on the overdue balance only. Interest may never be capitalised on default or punitive interest.
Cost to do it: Punitive interest of at most 30 percent of the default rate.
Example: With a default rate of 20 percent, punitive interest may not exceed 6 percent, so total default charges on an overdue PYG 100,000,000 are at most PYG 26,000,000 a year. / At most about US$4,431 a year.Ley Nº 489/1995 art. 44 as reworded by Ley Nº 2339/2003, art. 44, second and third paragraphs, 2003-12-26 official text · verified 2026-10-28
Cost to do it: Punitive interest of at most 30 percent of the default rate.
Example: With a default rate of 20 percent, punitive interest may not exceed 6 percent, so total default charges on an overdue PYG 100,000,000 are at most PYG 26,000,000 a year. / At most about US$4,431 a year.Ley Nº 489/1995 art. 44 as reworded by Ley Nº 2339/2003, art. 44, second and third paragraphs, 2003-12-26 official text · verified 2026-10-28
3. Credit cards. Interest on credit card use may not exceed three times the average deposit (passive) rate in the market.
Cost to do it: No fee; the cap limits card pricing.
Example: Illustration only: with an average deposit rate of 6 percent, card interest is capped at 18 percent. / Not applicable.Ley Nº 5476/2015 on credit and debit cards (promulgated 25 August 2015), art. 9, 2015-08-25 official text · verified 2026-10-28
Cost to do it: No fee; the cap limits card pricing.
Example: Illustration only: with an average deposit rate of 6 percent, card interest is capped at 18 percent. / Not applicable.Ley Nº 5476/2015 on credit and debit cards (promulgated 25 August 2015), art. 9, 2015-08-25 official text · verified 2026-10-28
4. Prepayment without penalty. In any sale or service on credit, the consumer may prepay all or part of the debt at any time; unearned interest is not charged and the prepayment may not be blocked, limited or charged a penalty under any name. The nominal annual rate must appear explicitly in the contract, and on notice of prepayment the supplier must immediately issue a clear statement of the debt at the cancellation date.
Cost to do it: No prepayment fee may be charged.
Example: A consumer who repays a 24 month loan after 10 months pays only interest accrued to that day. / Not applicable.Ley Nº 1334/1998, consumer protection, art. 30 as reworded by Ley Nº 6624/2020 (promulgated 15 October 2020, published 4 November 2020), Ley 1334/1998 art. 30 (text given by Ley 6624/2020 art. 1); Ley 6624/2020 art. 2, 2020-10-15 official text · verified 2026-10-28 · changed: Ley Nº 6624/2020, published 4 November 2020, rewrote art. 30 to bar any prepayment penalty and applies from the day after publication to all term obligations.
Cost to do it: No prepayment fee may be charged.
Example: A consumer who repays a 24 month loan after 10 months pays only interest accrued to that day. / Not applicable.Ley Nº 1334/1998, consumer protection, art. 30 as reworded by Ley Nº 6624/2020 (promulgated 15 October 2020, published 4 November 2020), Ley 1334/1998 art. 30 (text given by Ley 6624/2020 art. 1); Ley 6624/2020 art. 2, 2020-10-15 official text · verified 2026-10-28 · changed: Ley Nº 6624/2020, published 4 November 2020, rewrote art. 30 to bar any prepayment penalty and applies from the day after publication to all term obligations.
| Charge | Limit | Norm |
|---|---|---|
| Compensatory and punitive rates | Usurious above 130% of the average consumer rate | Ley 489 art. 44 |
| Default interest | No more than the agreed rate | Ley 489 art. 44 |
| Punitive interest | 30% of the default rate | Ley 489 art. 44 |
| Capitalisation | Not on default or punitive interest | Ley 489 art. 44 |
| Credit cards | 3 times the average deposit rate | Ley 5476 art. 9 |
| Consumer prepayment | No penalty | Ley 1334 art. 30 |
Interest limits
Worked example
- A foreign retailer offering instalment sales checks the Central Bank's monthly averages for the relevant term and currency every month, sets its rate below 130 percent of the average, states the nominal annual rate in the contract and drops the prepayment fee its home market template includes.
Step by step
- Get the Central Bank's monthly averages for the term and currency before pricing.
- State the nominal annual rate explicitly in consumer contracts.
- Configure systems so default interest never exceeds the agreed rate and punitive interest stays within 30 percent of it.
- Remove prepayment penalties from consumer templates.
Common traps
- Capitalising default interest: forbidden by art. 44.
- Using a cross currency average: the reference is by term and currency.
- Keeping a prepayment fee in consumer credit: barred by Ley 6624/2020.
Sources
- Ley 2339/2003 rewording Ley 489/1995 art. 44 (BACN)
- Ley 5476/2015 on credit and debit cards (BACN)
- Ley 6624/2020 rewording Ley 1334/1998 art. 30 (BACN)
- Ley 1334/1998 consumer protection (BACN)
- BCP exchange rate quotations
Related pages
- finance/interest-rates-usury-and-credit-cards
- regulation/consumer-protection
- normal-abroad/consumer-contracts-no-auto-renewal-or-forced-arbitration
- /calendar/
- /country/paraguay/
- Live dashboard
Related: Paraguay country profile · live dashboard · central bank and release calendar · our posts on X
Get rule changes weekly
Free. One email a week from The LatAm Thread.
One more step after you press the button: we take you to Substack, where your email is already filled in. Confirm there to start. No spam, unsubscribe anytime, we never share your address. By subscribing you agree to the privacy policy.