For loan agreements between a company as lender and a consumer as borrower, special statutory rules normally apply. These rules are designed to offer consumers special protection. The most important points are:

• The loan agreement must be drawn up and signed in written form.
• The loan agreement must contain comprehensive minimum information, such as the net amount of the loan, the supervisory authority responsible for the lender, the method of repayment, the interest rate, other loan costs and the effective annual interest rate.
• The borrowers have 14 days within which they are entitled to revoke the loan agreement.
• In the event of default on payment, the lender may only terminate the loan under certain conditions.

Exemption from consumer protection rules for micro, small and short-term loans

However, there are special cases in which these consumer protection rules do not apply, despite a loan agreement being entered into by a company and a consumer. Examples are loans in amounts of less than 200 euros, or loans – regardless of the amount – with a repayment period of three months, which are usually associated with lower costs. An assessment which takes into account all aspects of the agreement is made in order to decide whether lower costs have to be paid.

Providers advertising loans that can be granted or arranged quickly and easily in amounts of less than 200 euros or loans with, for example, 30-day repayment periods can be found online. These loans go by different names. Some are called micro loans, others small loans or – if the focus is on the repayment period – short-term loans.

What you need to know

If you enter into an agreement for such a loan, you are not covered by the special protection rules of the German laws on consumer loans. For example, providers are not required to present you with a written agreement with comprehensive information on the loan conditions that would give you the opportunity to reconsider whether you want to take out the loan. Furthermore, you have no right of revocation.
It is also advisable that you take a close look at the costs and interest rates of the loan before accepting such an offer.
If you have doubts about the legality of a loan being offered, please contact us at BaFin. The information you provide assists us in exposing potential violations of supervisory law and adopting measures to deal with this. We also recommend that you read the information on Filling a complaint with BaFin.