Contract trap · Loan and credit
Loan rollover trap
Payday and МФО loans offer «продление»: pay only interest and the principal rolls into a new term at the same daily rate; some auto-renew on non-payment or push 'refinancing' into a larger loan.
- Severity
- Severe
- How often it turns up
- Common
- Holds up?
- Depends where you are
- Clause phrases
- 19
What it looks like in a contract
Redline matches these phrases against your document verbatim. Drafters rarely invent new wording — they copy it, which is why the same sentences turn up across unrelated contracts.
In English-language contracts
- rollover
- renewal
- refinance your loan
- extend the due date
- pay the finance charge only
- your loan will automatically renew
- new loan to pay off
- extension fee
- unless you pay in full the loan will be renewed
In Russian-language contracts
- продление срока займа
- пролонгация
- услуга «Продление»
- для продления срока займа необходимо уплатить проценты
- автоматическое продление
- рефинансирование займа
- новый заём на погашение
- отсрочка платежа за плату
- 0,8% в день
- 292% годовых
Check your own contract
Paste a clause, a page or the whole document. Nothing leaves your browser: the matching runs here, on this page, against the phrases above.
Why it bites
At 0.8%/day the principal is repaid several times over within months; every extension resets the fee; auto-renewal hides the true APR; the debt spiral triggers collection and credit-file damage.
Is it enforceable where you are
The same clause can be routine in one country and void in another. What follows is what the law says where you are — not advice on your particular contract.
In the US, TILA/Regulation Z governs disclosure and the CFPB polices unfair practices; in the EU, the Consumer Credit Directive and Directive 93/13 apply, and the CJEU has repeatedly struck price and rate clauses that a borrower could not have understood.
United States
State law: many states cap rollovers (0-3) or ban payday lending; the CFPB 2017 Payday Rule's ability-to-repay provisions were rescinded in 2020; Military Lending Act 36% MAPR cap.
- Cited
- CFPB
- Military Lending Act
European Union
CCD2 requires Member States to cap interest, APRC or total cost; several states ban rollovers or cap non-interest costs (e.g. Poland, Lithuania).
- Cited
- CCD2
United Kingdom
CONC 6.7.23R — HCSTC may be refinanced at most twice; CONC 5A price cap; mandatory risk warning on adverts.
- Cited
- CONC 5A
- CONC 6.7.23R
Russia
353-ФЗ ст. 6 ч. 23 — daily rate ≤0.8%; ст. 5 ч. 24 — interest, penalties and fees on loans ≤1 year capped at 100% of principal (as amended by ФЗ № 545-ФЗ от 29.12.2025; 130% from July 2023 before that); extension itself is lawful; Банк России limits concurrent MFO loans and ПДН.
- Cited
- 353-ФЗ
- 545-ФЗ
- ст. 5 ч. 24
- ст. 6 ч. 23
Where this has actually happened
Regulator actions, court rulings and the contracts they were fought over.
- Займер, Правила (2026): «Для продления срока займа Заемщику необходимо зайти в Личный кабинет» — extension granted on payment of accrued interest
- FCA CONC 6.7.23R — high-cost short-term credit may be rolled over no more than twice
What to do
In order, from the thing that takes a minute to the thing that takes a letter.
- Never extend — pay principal
- Invoke the statutory total-cost cap (RU 100% of principal for loans ≤1 year
- UK 100%) to stop accrual and check statements
- Complain to ЦБ РФ/ФССП or the FCA if the cap is exceeded
- US: ask about state-mandated extended payment plans.
Traps that travel with it
Drafters who use one of these usually use several.