Withdrawal of a loan
In periods of low interest rates, it not only makes sense to take out a planned loan, but that existing loans are also checked. When reviewing current loan contracts in this way, one usually comes to the conclusion that much less interest should actually be paid at the moment. And it is precisely at this point that the question is always asked: Am I simply going to reschedule my loan contract or do I cancel my loan contract? However, other questions arise from the possible answer to such a question:
- Can I basically get out of a loan agreement?
- Is it correct that revocation is also possible for loan contracts?
- Can an early termination of a loan contract be carried out?
In the following we would like to give some answers to these questions and point out the legal situation in such a case.
Understanding the Withdrawal of a Loan
With all transactions, one should be aware that contracts must never be considered without consideration. In contract law, the “agreements must be kept” principle normally applies, which means that contracts are binding for both contracting parties. However, there is an exception for customers, because you are granted a right of withdrawal in principle.
This also counts for loan contracts if the borrower is a consumer. Loan contracts are also called consumer credit contracts. In the case of consumer credit contracts, which also include online loans, the borrower is granted this right of withdrawal.
Because of this, it is possible to withdraw from the contract within a certain period of time after the contract has been concluded with the help of cancellation notice. In plain language, this means that a contract that has already been concluded, that is to say, signed, is only pending until the end of the cancellation period.
However, there are some special cases in which the right to terminate consumer loans does not apply:
- Small or mini loans with a net loan amount of up to 200 euros
- Mortgage loan
- Short loans with a maximum loan term of three months
- Discounted loans from the boss or from the company
- Promotional loans on favorable terms
The borrower can withdraw from the contract for a period of two weeks after submitting his declaration of intent. The loan must be revoked in writing to the lender, but does not need to contain a reason. If the borrower considers withdrawing the loan, the two-week cut-off period must be observed. If it passes unused, the borrower has to fulfill the contract.
It is therefore always recommended to note the early cancellation and its acknowledgment by the donor in writing. This can be achieved by the borrower sending the revocation by registered mail to the lender. The post office employee’s relevant delivery note subsequently attests to the contemporary access to the addressee.
Lenders have to comply with the instructions
The cancellation period of two weeks comes into force when the borrower has been informed of the possibility of cancellation at the conclusion of the contract by means of clear, detailed instructions in writing. This letter must not only contain comprehensive information on the details of the deadline and the right of withdrawal, but also the name and address of the person to whom the right of withdrawal is to be explained.
Consequences if the obligation to provide information is not fulfilled
The withdrawal period can also be extended under certain conditions. On the one hand, this is the case if the cancellation policy is only given after the contract has been concluded. After that, the cancellation period is one month. If – as in the case of a loan contract – the contract is concluded in writing, the cancellation period does not begin until the borrower has been given his written loan application or a contract document or a copy of one of these documents.
If these credit documents have not been submitted, the option to withdraw expires at the latest six months after the contract has been concluded. However, an exception must also be made here if the borrower has not been instructed, or has not been instructed in detail, about the right of withdrawal. In this situation, the borrower is granted an unlimited right of withdrawal.