For consumer loans, borrowers have rights that they do not need to be granted for other types of loans. For example, the consumer is granted a right of withdrawal.
Banks must meet various legal requirements when granting loans. But they too have certain rights over the consumer.
Installment Loan, Construction Financing, Promotional Loan: What exactly is a consumer loan?
What falls exactly under the designation “consumer credit”, is quite clearly regulated in § 491 of the Civil Code (BGB). These are “paid loan agreements between an entrepreneur as a lender and a consumer as a borrower.” If you as a consumer at a bank install an installment loan or mortgage lending, so it is a consumer loan . The same applies to start-up loans. Interest-free and private loans, commercial loans, loan amounts of less than 200 euros, employer loans and development loans are, however, exempt from consumer loan legislation.
Duties of banks towards the consumer
Before you conclude a loan agreement as a consumer, the bank must inform you about the terms of the loan. This also means that you are informed about the costs incurred. Therefore, for example, the annual percentage rate and the loan amount must be explicitly stated. You must also be informed about your right of withdrawal. If a bank does not meet the legal requirements, they are void. However, as a consumer, you can not always insist on contract termination due to form errors if you have already received the loan amount.
Rights of consumers
In particular, in the case of revocation instructions for loan agreements, some institutions have made mistakes in the past. As a result, the statutory withdrawal period was suspended and affected consumers could revoke such a contract years later. If the loan was repaid early, in such a case, consumers could have the prepayment penalty paid by them reimbursed by their bank.
But even without formal deficiencies you have a right of withdrawal for consumer loans. This applies – as with online shopping – a period of 14 days. If you have also taken out a residual debt insurance together with the loan, this can also be revoked within the 14-day period. Since the end of March 2016, the statutory right of revocation also applies to so-called zero-percent financing, which is offered directly by many traders.
The bank has the right to compensation for early repayment
However, consumers also have obligations to their creditors with the credit agreement. So you not only commit to the proper repayment of your loan, but also to pay the bank a certain interest in the provision of their money. In this case, as the bank expects expected revenues from early repayment or replacement of a loan , it has the right to demand compensation from the borrower.
With regard to the amount of this prepayment penalty, installment loans taken out after 11 June 2010 are subject to statutory provisions. The compensation may amount to a maximum of one percent of the remaining debt, with remaining terms of less than twelve months even 0.5 percent. For mortgage lending, however, the amount of the compensation is at the discretion of the bank, a legal regulation does not exist here. In case of doubt, consumers should consult an independent expert if they find the prepayment penalty demanded by the mortgage lender too high.