“I saw a loan at 3.9 % – is that good?” Honestly, few people get the 3.9 %. Here is how to read German loan offers and which rights the law gives you. What you sign is your decision.
Effective rate and the two-thirds rate
The effective annual rate (Effektivzins) is the mandatory comparison figure (Price Indication Ordinance, PAngV). Most offers are credit-dependent: the “from” rate goes to the best customers. Adverts must show a representative example at a rate that at least two thirds of customers actually get or beat (§ 17 PAngV).
Term, instalment, total cost
| €10,000 at 6 % effective | Monthly | Total interest |
|---|---|---|
| 36 months | ≈ €304 | ≈ €930 |
| 72 months | ≈ €165 | ≈ €1,880 |
Half the instalment, double the interest. Keep the term as short as affordable.
Payment protection insurance (Restschuldversicherung)
Consumer advice centres rate it as usually very expensive with patchy cover. Since 1 January 2025 for consumer loans: no tying, a one-week waiting period after the loan contract (§ 7a (5) VVG, otherwise void), and a 2.5 % commission cap (§ 50a VAG). Its cost is not in the effective rate.
Your statutory rights
Withdrawal: 14 days from contract and receipt of all mandatory information (§§ 495, 355 BGB). Early repayment: any time (§ 500 BGB); penalty capped at 1 % of the amount repaid, 0.5 % with under a year left (§ 502 BGB).
Refinancing logic
Saving = (old rate − new rate) × balance × remaining term − penalty (max 1 %) − new costs
Clearly positive? Worth calculating – mind “consolidate all debts” offers that only work through a longer term.
Overdraft vs. instalment loan
Stiftung Warentest found an average overdraft rate of 10.99 % in May 2026 (highest 15.39 %); the Bundesbank reports 9.46 % volume-weighted for August 2026. A permanent €2,000 overdraft at 11 % costs about €220 a year; an instalment loan at 7 % about €140 – with a fixed end. Cheapest: clear the minus.
Schufa
Germany’s main credit bureau stores loans, accounts and defaults and derives a score. A free data copy is available under Art. 15 GDPR directly from Schufa. Deletion: loans three years after repayment; settled defaults three years, or 18 months since 2025 if paid within 100 days with nothing else on file; enquiries 12 months; discharge of residual debt 6 months. Ask for a non-binding Konditionsanfrage when comparing.
If it gets tight
Recognised debt counselling by municipalities, welfare organisations or consumer advice centres is free, often with waiting times. Avoid fee-charging “financial restructurers”.
I do not broker loans or rate offers. Whether and what suits you is something to clarify with an adviser licensed for that purpose.
How to proceed
- Request your Schufa data copy and check for errors.
- Compare effective and two-thirds rates, not “from” rates.
- Choose the shortest affordable term.
- Decide on payment protection separately – a week later at the earliest.
- For refinancing, run the formula.
General information, not legal, tax or investment advice. Sources: German Civil Code (§§ 355, 495, 500, 502 BGB), Price Indication Ordinance (§ 17 PAngV), Insurance Contract Act (§ 7a VVG), Insurance Supervision Act (§ 50a VAG), GDPR (Art. 15), BaFin, Stiftung Warentest (May 2026), Deutsche Bundesbank, Schufa, consumer advice centres – as of October 2026. Unsure what your loan contract says? Get in touch.
