Your rights with a consumer loan
This covers withdrawal, early repayment, the cap on early repayment compensation and the two-thirds rule for advertised rates, complete with deadlines and section references.
Four rights determine what a loan really costs in the end. All four are set out in law, all four can be put into figures — and none of them appears in a rate comparison.
What you will find here
This section sets out the statutory entitlements under German consumer credit law and gives the legal provision for every statement. We quote the law rather than summarising it, so that you can look up each point yourself. This is general information and not legal advice. In a specific dispute with a lender, a consumer advice centre (Verbraucherzentrale) or a lawyer is the right place to turn.
- Withdrawal: 14 days — and when the period starts is the crucial point
- Early repayment: at any time, in full or in part
- Early repayment compensation: capped at 1 per cent
- Advertised example: expected for at least two thirds
Why the order matters
The rights apply at different moments. Before you sign, the two-thirds rule helps you put an advertising promise into perspective. Immediately after signing, withdrawal is what counts. And during the term, early repayment determines whether refinancing or a special repayment is worthwhile. If you know all four, you calculate differently — because the total cost of a loan is not fixed once you are allowed to pay it off early at any time.
Frequently asked questions
What rights do I have as a borrower?
Four are central: the 14-day right of withdrawal under § 355 of the German Civil Code (BGB), the right to repay early at any time under § 500 (2) BGB, the proportional reduction in costs under § 501 BGB and the cap on early repayment compensation (Vorfälligkeitsentschädigung) under § 502 (3) BGB. In addition, § 17 (4) of the Price Indication Ordinance (PAngV) requires the advertiser to base the representative example on an annual percentage rate at which it can expect at least two thirds of the contracts concluded as a result of the advertising to be made, or a lower one.
Can I pay off a loan early at any time?
For a general consumer loan, yes: § 500 (2) sentence 1 BGB allows early repayment at any time, in full or in part. For a consumer property loan with a fixed borrowing rate, this applies during the fixed-rate period only if you have a legitimate interest.
Selected sources
Note: This article is general information and not legal advice. It does not replace an assessment of your individual case by a lawyer or a consumer advice centre. No guarantee of accuracy; the law and case law may change.
Your next steps
Withdrawal
The withdrawal period for a loan is 14 days, but it only starts once you have the contract document – and, if mandatory information is missing, only once it has been supplied.
Read moreEarly repayment
An instalment loan may be paid off in full or in part at any time – and the interest and costs for the remaining term fall away.
Read moreEarly repayment compensation
For an instalment loan, early repayment compensation is capped at 1 per cent, or 0.5 per cent if little of the term remains – and sometimes it does not apply at all.
Read moreRepresentative example
The yardstick is not the “from” rate but the representative example: the advertiser must be able to expect at least two thirds of contracts to achieve or beat its APR.
Read more