Recent development

Pursuant to the new Consumer Protection Law, on January 14, 2015, the Ministry of Customs and Trade issued its Regulation on Installment Sales Agreement (the "Regulation") setting out the legal framework for installment sales agreements. The Regulation sets forth content requirements and regulates the consumer's right to cancel and events of default.

The Regulation applies to:

  • consumer installment sales agreements, and
  • financial leasing agreements where the consumers acquire ownership at the end of the lease.

The Regulation does not apply to prepaid sale agreements where the payment term is more than a year or indefinite, and the seller delivers the movable property to the consumer only after final payment.

Additionally, credit card purchases are not subject to the Regulation.

What the Regulation says

Content of the agreement

Installment sales agreements must include:

  • The total cash price of the goods or services, inclusive of taxes in TRY,
  • The total installment sales price of the goods or services, inclusive of taxes in TRY,
  • The conditions, time frame and procedure for cancellation,
  • The payment schedule,
  • Information on prepayment rights and the right to a pro rata discount on interest and commissions in the event of a full prepayment,
  • The amount of interest to be charged, the annual interest rate, and default interest, and
  • The consequences of default.

Cancellation right

The consumer is entitled to cancel the agreement within seven days, without cause and without penalty; he/she has only to inform the seller or provider of the decision in writing or on a permanent data carrier, e.g., email.  

Actions to consider

Companies that provide goods or services to consumers through installment sales agreements should take the necessary steps to bring their activities into compliance with the Regulation.