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LIVING IN GERMANY

Has it just got easier to end credit agreements in Germany?

An EU court has reached a decision that could make it much easier for people in Germany to get out of credit agreements - even if the contract was signed years ago. Here's what you need to know.

Has it just got easier to end credit agreements in Germany?
A landmark ECJ ruling has found that a number of credit contracts could have loopholes. Photo: picture alliance/dpa/dpa-tmn | Christin Klose

What’s happening?

In the first weeks of September, the European Court of Justice (ECJ) made a clear ruling in favour of credit consumers in Germany. Having examined a number of contracts from VW Bank, the Skoda Bank and the BMW Bank, the court concluded that the majority of them contain crucial flaws that essentially put consumers at a disadvantage. 

In its judgement, the ECJ said that what was written in the contracts should be understandable for the average consumer with no financial expertise.

For example, it should be clear to people how much more they will have to pay if they repay the loan early, what interest rates they can expect if they fall behind in their repayments, and what happens if they try and get out of the credit agreement before it’s up. 

“It’s an unbelievable decision,” one expert told Tagesschau after the ruling, adding that it could be a “milestone” for consumer rights in the EU. 

What does this mean for people with credit contracts? 

Essentially, it appears to give people a new get-out clause for credit contracts that they’re unhappy with – even if they originally signed the contract several years ago. That could apply to people who have bought cars, household items or a holidays on credit – though different rules apply to mortgages.

READ ALSO: Why bank customers in Germany are facing higher fees

Generally, people in Germany are given a ‘cooling off’ period of two weeks in order to change their minds and revoke the contract. But if the credit agreement has the kinds of defects the ECJ mentions, it essentially means that the two-week withdrawal period never starts. 


People who’ve bought a car on credit in Germany may be able to get out of their contract – even after several years. Photo: picture alliance/dpa/dpa-Zentralbild | Gerald Matzka

If that’s the case, someone who bought a washing machine or laptop on credit a few years back could still have the chance to go back to the bank, return the item and end their agreement. 

This is particularly good news for people who are stuck in high-interest contracts at a time when interest rates have hit rock bottom, or whose life circumstances have changed and aren’t able to afford the contract they were on before.

For these people, escaping an awkward credit agreement could be a huge relief.

What happens if I cancel my contract?

If you’re unhappy with your credit contract and believe it to be invalid, you can return the items to the place where you got them, end the agreement and get back the instalments you’ve paid so far.

Obviously, the used item will be worth less than it was before – but the question of how this loss of value will be calculated, and whether consumers will have to pay for it at all, has not yet been clarified. 

Speaking to Tagesschau, attorney Andreas Paul said he believed that, in the vast majority of cases, ending the credit agreement should be far more lucrative than selling the used item on.

But is it really that simple? 

That’s the key question. While the ECJ ruling is undoubtedly great news for consumer rights, it’s unclear how much ordinary people in Germany will have to fight to get it applied.

“If banks take back used goods or offer a settlement, a solution can be found quickly,” attorney Simon Bender told Tagesschau. 

READ ALSO: Why a German court decision means you could be entitled to compensation from your bank

However, things can get much more complicated if the credit company starts to argue about how much money the customer is entitled to get back, or if they point blank refuse to issue a refund. “If the consumer has to go to court, the case can drag on for up to a year,” Bender explained. 

According to consumer rights experts, the prospects of success are made worse by the fact that Germany’s Federal Court of Justice has traditionally ruled against consumers in cases like this.


Germany’s Federal Court of Justice has tended to come down in favour of the creditors rather than consumers in the past. Photo: picture alliance/dpa | Uli Deck

You should also bear in mind that the credit you’ve taken out should come from the same place at the goods you’ve bought – so it’s no good returning a laptop to Mediamarkt that you bought on a credit card from DKB. Generally, if a shop or car dealership has allowed you to pay for their goods in instalments at interest, that’s the kind of agreement the ECJ ruling affects. 

In any case, the best policy is to get some advice from a local consumer rights body before attempting to get a contract revoked. They should be able to tell you what your options are, and how likely you are to have success.

And if you are prepared for a fight with your creditors, it may also be a good idea to have some legal costs insurance or reserves to hand, just in case. 

Vocabulary

credit agreements – (die) Kreditverträge

easy to understand – leicht verständlich

consumers – (die) Verbraucher

withdraw – widerrufen 

We’re aiming to help our readers improve their German by translating vocabulary from some of our news stories. Did you find this article useful? Let us know.

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LIVING IN GERMANY

REVEALED: The most commonly asked questions about Germans and Germany

Ever wondered what the world is asking about Germany and the Germans? We looked at Google’s most searched results to find out – and help clear some of these queries up.

Oktoberfest
Hasan Salihamidzic, the sports director of FC Bayern, arrives with his wife at Oktoberfest in full traditional dress. Photo: picture alliance/dpa |

According to popular searches, Germany is the go-to place for good coffee and bread (although only if you like the hard kind) and the place to avoid if what you’re looking for is good food, good internet connection and low taxes. Of course, this is subjective; some people will travel long stretches to get a fresh, hot pretzel or a juicy Bratwurst, while others will take a hard pass.

When it comes to the question on the bad Internet – there is some truth to this. German is known for being behind other rich nations when it comes to connectivity. And from personal experience, the internet connection can seem a little medieval. The incoming German coalition government has, however, vowed to improve internet connectivity as part of their plans to modernise the country.

There are also frequent questions on learning the German language, and people pointing out that it is hard and complicated. This is probably due to the long compound words and its extensive grammar rules, however, as both English and German are Germanic languages with similar words in common, it’s not impossible to learn as an English-speaker.

Here’s a look at some of those questions…

Why is German called Deutsch? Whereas ‘German’ comes from the Latin, ‘Deutsch’ instead derives itself from the Indo-European root “þeudō”, meaning “people”. This slowly became “Deutsch” as we know it today. It can be a bit confusing to English-speakers, who are right to think it sounds a little more like “Dutch”, however the two languages do have the same roots which may explain it.

And why is Germany so boring? Again, probably a generalisation, especially given that Germany has a landmass of over 350,000 km² with areas ranging from high rise, industrial cities to traditional old town villages and even mountain ranges, so you’re sure to find a place that doesn’t bore you to tears.

Perhaps it is a question that comes from the stereotype that Germans are obsessed with strict about rules, organised and analytical. Or that they have no sense of humour – all of these things being not the most exciting traits. 

Either way, from my experience I can confirm that, even though there is truth to German society enjoying order and rules, the vast majority of people are not boring, and I’m sure if you come to Germany you’ll meet many interesting, funny and exciting people. 

READ ALSO: 12 mistakes foreigners make when moving to Germany

When it comes to the German weather, most people assume a cold and cloudy climate, however this isn’t entirely true. While the autumn and winter, especially in the north, comes with grey skies and sub-zero temperatures, Germany can have some beautiful summers, with temperatures frequently rising above 30C in some places.

Unsurprisingly, the power and wealth of the German nation is mentioned – Germany is the largest economy in Europe after all, with a GDP of 3.8 trillion dollars. This could be due to strong industry sectors in the country, including vehicle constructions (I was a little surprised to find no questions posed on German cars), chemical and electrical industry and engineering. There are also many strong economic cities in Germany, most notably Munich, Frankfurt am Main and Hamburg.

READ ALSO: Eight unique words and phrases that tell us something about Germany

Smart and tall?

Why are Germans so tall? They are indeed taller than many other nations, with the average German measuring a good 172.87cm (or 5 feet 8.06 inches), however this may be a question better posed to the Dutch, who make up the tallest people in the world.

Why are Germans so smart? While this is again a generalisation – as individuals have different levels of intelligence in all countries – this question may stem from Germany’s free higher education system or their seemingly efficient work ethic. Plus there does seem to be some scientific research behind this question, with a study done in 2006 finding that Germans had the highest IQ in Europe.

So, while many of the questions posed about Germany and Germans on Google stem from stereotypes, we can confirm that some aren’t entirely made up. If you’re looking to debunk some frequently asked questions about France and the French, check out this article by our sister site HERE.

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