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What types of loans are there in Germany

«A Kredit in Germany is not a single product, but a family of very different contracts. The interest rate, the rights regarding early repayment, and what happens in the event of default all depend on which specific one you take out.

Important autumn 2026 change. Today, payment in instalments (via Klarna and similar services) and «0 %» instalment plans offered by the dealer are, strictly speaking, are not considered a consumer loan under German law: they have no mandatory right of withdrawal and no mandatory credit check. 20th November 2026 that is changing — all of them fall under the protection of the Consumer Credit Act.

How much does money cost in 2026

Below is official Bundesbank statistics on new agreements by German banks. Data for June 2026, published on 31 July 2026. This is neither advertising nor an assessment: these are market averages.

The first non-obvious conclusion: A long-term loan is more expensive not only in terms of the total overpayment, but also in terms of the interest rate itself — 8.73 % compared with 6.93 %. The bank factors in a higher level of risk over a longer term.

Sollzins and Effektivzins — only the latter can be compared

Sollzins is the «naked» interest rate. By law, the Effektivzins (annual percentage rate) includes all borrower expenses known to the bank: broker commission, mandatory account fees, and property valuation. Offers can only be compared using the effective rate — and in advertising, it must be highlighted at least as prominently as any other.

However, there is a loophole worth knowing about. Restschuldversicherung (loan repayment insurance) into the effective APR it won't log in, even if it is technically voluntary. This is precisely why a «cheap» loan with insurance included actually costs significantly more, although the effective interest rate figure does not reflect this. The difference is evident in the Bundesbank’s statistics: 8.00 % without associated costs versus 8.35 % with them.

«From 3.99 %» — that figure isn’t for you

If the rate depends on your credit history, the bank indicates a range. The lower limit goes to a small proportion of applicants. You need to look at representative exampleby law he must proceed from the rate at which the minimum is concluded two thirds contracts for this advertising. This is indeed a realistic figure.

How much does it cost to extend the term: calculation for €10,000

The most common mistake is choosing a loan based on the monthly payment amount. Here is what happens to the same amount over different terms, calculated using average Bundesbank interest rates for each term:

The payment decreased by almost five times, while the overpayment increased by eight. Rule of thumb: take the maximum payment that your budget can withstand in an adverse scenario, rather than the minimum that is «comfortable».

A separate note on overdrafts: a debt of €2,000 on an account at 9.39 % per annum costs approximately €188. The same amount as a standard 12-month loan would cost around €69. An overdraft is fine for a few days before payday, but it’s not a way to live.

Borrower rights that the bank won't tell you about

Fourteen days to cancel – and sometimes much longer

A consumer loan can be cancelled within 14 days without giving reasons (§ 495 BGB). It is sufficient to send the notice in good time — receipt by the bank by the deadline is not required.

But the time limit starts to run only then, when you received the copy of the contract and all mandatory information. If even one of them is given incorrectly or unclearly, the time limit does not begin at all. For a standard consumer loan in the law no upper limit — hence the term «eternal right of recall».

From 20 November 2026, this changes: a ceiling appears in 12 months and 14 days. But with two caveats that are hardly ever written about anywhere. Firstly, the cap only works if information about the right of withdrawal was actually given — even if with errors. Secondly, to contracts concluded before 20 November 2026, the old law appliesthey remain «perpetually recallable» until the end of their term.

You can make an early repayment at any time, and it's inexpensive

Order of magnitude: early repayment of the remaining balance of €6,000 costs a maximum of €60 or €30. This is much less than is usually feared. And it ceiling, and not an automatic sum — the bank is obliged to justify the actual loss.

3. An error in the contract costs the bank money

Separately: the loan processing fee (Bearbeitungsgebühr) for consumer loans was declared invalid by the Federal Court of Justice back in 2014 (BGH, XI ZR 405/12 and XI ZR 170/13). If it was deducted, demand a refund.

Remaining debt insurance: the main hidden markup

Payment Protection Insurance (PPI) — insurance in the event of death, incapacity or job loss. It is sold with almost every loan and can increase its cost by tens of percent. BaFin states explicitly: it «can significantly increase the cost of your financing».

Practical tip: ask the bank for a calculation total amount to be refunded (total amount) in two versions – with and without insurance. The difference is its real cost.

As of 20 November 2026, a right to be forgotten is added: overcome cancer, the treatment of which has been completed not less than 15 years ago, is not considered a material circumstance for the RSV, and insurers are prohibited from using this data.

If there is nothing to pay with

Bank cannot demand the full amount at once

The bank can demand early repayment of the entire remaining balance only if all three conditions are met simultaneously (§ 498 BGB):

1. you defaulted at least two consecutive payments, fully or partially;
2. arrears are at least 10% of the loan amount for contract terms up to three years, or 5 % for periods over three years (for mortgages — 2.5%);
3. bank gave you in writing two-week period for repayment, with a direct warning that otherwise the full amount would be demanded — and the deadline passed without result.

In addition, the bank obliged no later than together with this deadline, offer negotiations for an amicable settlement. Demanding the full amount after a single missed payment or without written notice is unlawful.

Late payment interest and the order of payment allocation

What cannot be deducted from the account

С 1 July 2026 new income exemption limits apply to enforcement:

Please note: the text of the laws on the official portal contains old 2021 amounts – they are not updated. Only the figures from the annual announcement, which is released in spring and takes effect on July 1, are current.

Procedure

1. Do not take out a new loan to pay off an old one. This is the most common entry point for fraudsters.
2. Write to the bank until arrears: request a postponement, payment reduction or refinancing. The bank is interested in repayment, not in court.
3. Check that the conditions of § 498 BGB are met before agreeing to the demand for the full amount.
4. Contact the recognised free advice for debtors (Schuldnerberatung) at the local municipality, charitable association, or Verbraucherzentrale. Waiting lists can be several weeks — register in advance.
5. In a hopeless situation, there is consumer insolvency: discharge from the remaining debt occurs after three years from the moment the proceedings are opened.

From 20 November 2026 The bank gains a direct obligation to show reasonable forbearance before commencing enforcement proceedings: extend the term, change the type of loan, grant a payment pause, reduce the interest rate, or arrange partial debt forgiveness. Additionally: upon termination of an overdraft facility, the bank must offer repayment. in twelve equal payments at no extra cost — and this rule will also apply to overdrafts that are already in place.

How to spot scammers

The market for "loans without Schufa" relies on one trick: money is taken upfront but the loan is not issued. German law directly prohibits this.

And the main rule. The Verbraucherzentrale phrases it this way: if a bank denies you credit, perceive it as warning signal, not as a reason to look for someone who will agree.

Context: according to BaFin data in 2025, Germany had 5.67 million people with over-indebtedness — 8.16% of the adult population and the first growth of this indicator since 2018. Half of new loans are amounts less than 1,000 €.