Cancellation of a credit agreement
Consumers have the right to cancel a consumer credit agreement within 14 days of entering into the agreement or a later date on which the consumer receives a written or electronic credit agreement. If the agreement is delivered to the consumer afterwards, the cancellation period begins upon the consumer's receipt of the agreement.
The creditor must be notified of the cancellation of the credit agreement in writing or in some other permanent format, e.g. email. The reason for this cancellation need not be divulged.
Compensation for the cancellation
The lender may request a compensation for the cancellation of the credit if the borrower has been notified of the cancellation compensation before the conclusion of the agreement and it is mentioned in the agreement. The compensation is usually the amount paid as interest on the credit for the period during which the loan has been available to the borrower.
If the credit is taken by means of distant selling (email, telemarketing or other means of communications), which is often the case with such products as instant loans, the right of the lender to receive compensation depends on such matters as the size of the loan:
- In loans between EUR 200 and 75,000, the lender has the right to claim the amount paid as interest for the time during which the loan has been available to the borrower.
- In loans less than EUR 200 euros and more than EUR 75,000, the lender has the right to claim the amount paid as effective interest for the time during which the loan has been available to the borrower. Thus, making use of the right to cancel such loans may be costly.
Returning the money to the lender
The money must be returned to the lender’s account without delay and no later than 30 days after the sending of the cancellation notification. If the money is not returned within 30 days of the cancellation notification, the cancellation becomes invalid and the original agreement enters into force.