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New consumer-friendly rules for loans


If consumers repay their loan before the due date, they should get more money back from their bank than before.
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The legal regulations for the revocation of loans and their early repayment should become simpler. The government has initiated a reform that had become necessary after various court rulings.

D.he loan law should become more transparent and consumer-friendly. On Wednesday the Federal Cabinet passed a draft law from the Justice and Consumer Protection Ministry, but the Bundestag still has to approve the planned changes. The background is various judgments of the European Court of Justice (ECJ) on exercising the right of withdrawal after the conclusion of a consumer loan contract and the start of the 14-day period. During this period, consumers can withdraw from the contract without giving reasons.

So far, many providers and intermediaries have used the reference to the relevant standards in the legal text. The so-called cascade reference was last criticized by the European Court of Justice in the spring. The European judges demanded clear instructions that consumers can understand. In future, banks and building societies will be obliged to inform the consumer when the 14-day period begins when the contract is concluded. This creates additional work for the lender because they have to list all the necessary mandatory information directly in the cancellation information.

In addition, consumers who repay their loan before the due date should be entitled to reimbursement in the future, including one-off fees. In another ruling in September 2019, the European Court of Justice clarified that the reduction also includes costs that are independent of the duration.

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