Quick-loan contracts are usually short, signed online and rarely read. Their effect, however, can be dramatic: a loan of a few hundred euros turns into a demand for two or three times that amount once interest, penalties, “express processing” fees and default charges are added together.
A useful rule of thumb for short loans of a few months: if the total you are asked to repay exceeds what you actually received by more than 30–40%, the contract very likely contains void terms. Three types of clause account for most of the problem.
1. The penalty that punishes far more than it protects
A contractual penalty is meant to secure performance, compensate the lender for foreseeable loss and, to some degree, discipline the borrower. When it goes well beyond those purposes, it is contrary to good morals and void under Art. 26(1) of the Obligations and Contracts Act.
The Supreme Court of Cassation set out how to test this in point 3 of Interpretative Decision No. 1 of 15 June 2010 (interpretative case No. 1/2009). The assessment is made case by case, as at the date the contract was signed, looking at:
- the nature and size of the obligation the penalty secures;
- whether it is already secured in other ways — a guarantor, a pledge, a mortgage;
- what kind of penalty it is, and whether the breach is serious or trivial;
- how the penalty compares with the loss the lender could realistically expect.
Quick-loan contracts typically fix a penalty of 20–80% of the whole loan, triggered by any breach however small, while interest keeps running separately — often per day. Measured against those criteria, such a penalty has nothing to do with the lender’s real loss. It is void from the moment of signing and gives the lender no rights at all.
2. Interest that is simply too high
Interest expressed per day — 1%, 3%, 5% — looks modest until it is annualised into hundreds of percent. Bulgarian courts treat disproportionately high interest as contrary to good morals as well. Consistent case law of the Supreme Court of Cassation draws the line at:
The courts reason that such rates destroy the balance between what each side gives and receives and unjustly enrich the lender — a separate ground of nullity in itself. A new Consumer Credit Act, implementing EU Directive 2023/2225, is before Parliament and is expected to apply to contracts concluded from 20 November 2026; contracts signed earlier remain under the current Act.
3. Default charges calculated on the wrong amount
When a consumer falls behind, Art. 33 of the Consumer Credit Act allows the lender compensation only on the overdue amount, only for the period of delay, and never above the statutory interest rate. Many contracts ignore this and charge 1–5% a day on the entire loan. A clause like that contradicts a mandatory provision of the Act and is void.
What “void” means for you
A void clause produces no effect from the start. In practice that gives you two tools:
- A defence. If the lender has obtained an order for payment, object within two weeks of service; in the court case that follows, the court must check the consumer contract for unfair terms on its own initiative, and void charges are struck out of the claim.
- A claim. If you have already paid sums under void clauses, you can claim them back as unjust enrichment. The five-year period normally runs from each payment, but for unfair terms it cannot start before you knew, or could reasonably have known, that the term was unfair — so older payments may still be recoverable.
Before you pay a collector
Ask for the contract, the general terms and a breakdown of every amount claimed — principal, interest, penalty, fees. Do not sign acknowledgements of debt or new repayment agreements before the contract has been reviewed; they can make a later defence more difficult.
Questions clients ask
Can I challenge a clause in a loan contract I signed online?
Yes. The rules are the same whether the contract was signed on paper or online. The court can examine unfair terms in a consumer contract of its own motion, and you can ask it to declare them void.
I have already repaid the loan. Is it too late?
Not necessarily. Money paid under void clauses can usually be reclaimed for five years from each payment — and for unfair terms the period cannot start before you knew, or could reasonably have known, that the term was unfair.
Does the borrower still have to repay the principal?
Yes. Nullity of the penalty, excessive interest or default charges does not cancel the loan itself; the amount actually received still has to be repaid. Under the Consumer Credit Act, where the contract as a whole is invalid, the borrower repays only the net amount received, without interest or charges.
This guide is general information about Bulgarian law as it stood on the date of publication. It is not legal advice for your specific case.
