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Car loan agreements can still be revoked after years

A.On Thursday, the European Court of Justice (ECJ) in Luxembourg once again strengthened the rights of consumers when it comes to financing vehicles. In several proceedings against Volkswagen Bank, Škoda Bank and BMW Bank, the European judges consider it possible to exercise a right of withdrawal even years later because the car banks did not adequately inform their customers about the legal situation when the loan agreements were concluded (cases C-33 / 20, C-155/20 and C-187/20).

A reversal resulting from this does not only affect the actual financing contract. Since it is a “linked credit agreement”, consumers can also withdraw from the original purchase agreement. You then have to return the car, repay the loan granted and expect usage benefits to be deducted. In the opinion of consumer lawyers at Hahn law firm, this can have a positive overall effect on the consumer – they typically estimate the gain in the four-digit range. “As a rule of thumb, one can say that consumers are concerned with amounts that can amount to around 20 to 25 percent of the respective vehicle purchase price,” explains lawyer Christian Rugen from the Hahn law firm.

No uniform jurisprudence

In the six proceedings now summarized by the ECJ, the customers had revoked their loan agreement in 2018 and 2019, in some cases several years after payment of the last loan installment, in some cases before the loan agreement was fully fulfilled. They went to court against the various banks in Ravensburg. On the other hand, the defendants asserted that they had provided the information required by the EU directive – the withdrawal period (usually 14 days after the conclusion of the contract) had also long expired. The Ravensburg Regional Court suspended the lawsuits and asked the ECJ for answers to the open questions regarding car loan agreements in the preliminary proceedings. Explosive from the point of view of the financial institutions: So far, the Federal Court of Justice (BGH) had backed them with its case law.

The ECJ took away this security from them on Thursday. The judges in Luxembourg criticized the inaccurate information in the loan agreements. The default interest should be given in the form of a specific percentage. For the adjustment of the interest rates, the mere reference to the change in the base rate set by the central bank is not sufficient. The chamber also writes that the amount of the compensation due in the event of early redemption must be stated in an “easily comprehensible manner” for an average consumer. The judges did not allow the automobile banks’ objection to abuse of law by customers or the forfeiture of the right of withdrawal. With reference to EU law, the lender may not refuse the revocation if a mandatory information is missing in the loan agreement and has not been communicated subsequently. The customer’s knowledge of his right of withdrawal then no longer matters.

The effects of the decision now have to be analyzed in detail, according to the German banking industry. This applies in particular against the background that the BGH has already dealt intensively with a large number of the questions raised. “Here it will also have to be taken into account that the interpretation of the EU consumer credit directive must not lead to the need to act against the unambiguous wording of a national law,” writes the lobby group of the central banking associations to the FAZ

According to a court spokesman, around 30 comparable civil lawsuits are pending against the car banks in Ravensburg. The number of proceedings is likely to increase significantly across Germany. The plaintiff’s attorney Christof Lehnen speaks of a “gigantic scope” of the judgment. It is true that the proceedings only affect the car loan agreements of Volkswagen Bank and BMW Bank. “The errors complained about by the ECJ can be found in all consumer credit agreements of all banks operating in Germany since 2010”, claims the partner of the Trier law firm, Dr. Lean & make sense. There is hardly a loan agreement that cannot be revoked.

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