Revocation of a car loan agreement

The ECJ has issued its ruling on the revocation of consumer credit agreements concluded to finance the purchase of a car.

Several car buyers are in dispute with Volkswagen Bank, Skoda Bank and BMW Bank, respectively, before the Regional Court of Ravensburg on whether they could effectively revoke the credit agreements concluded with these banks for the purpose of a car purchase years after the conclusion of the agreement (in some cases even after full repayment) because the agreements would not have contained all the required information. According to Article 14 of Directive 2008/48 on consumer credit, the consumer may revoke the credit agreement within 14 calendar days without giving any reason, with the revocation period starting either on the day on which the credit agreement is concluded or on the day on which the consumer receives the terms of the agreement and the information pursuant to Article 10 of the Directive, if later.
In this context, the Ravensburg Regional Court asked the Court of Justice to interpret these two provisions of the Directive.

In its judgment, the Court answers the Landgericht Ravensburg as follows:

(1) Article 10(2)(a), (c) and (e) of Directive 2008/48/EC of the European Parliament and of the Council of 23 April 2008 on credit agreements for consumers and repealing Council Directive 87/102/EEC must be interpreted as meaning that the credit agreement must, where appropriate, state in a clear and concise manner that it is a 'linked credit agreement' within the meaning of Article 3(n) of that directive and that that agreement has been concluded as a fixed-term agreement.

(2) Article 10(2) of Directive 2008/48 must be interpreted as not requiring a 'linked credit agreement' within the meaning of Article 3(n) of that directive, the sole purpose of which is to finance a contract for the supply of goods and which provides that the amount of credit is to be paid to the seller of those goods, to state that the consumer is released from his obligation to pay the purchase price up to the amount of the amount paid and that, if the purchase price is paid in full, the seller is to hand over to him the goods purchased.

3) Article 10(2)(l) of Directive 2008/48 must be interpreted as meaning that the credit agreement must specify the rate of default interest applicable at the time of the conclusion of that agreement, in the form of a specific percentage rate, and the mechanism for adjusting the rate of default interest must be described in concrete terms. If the parties to the relevant credit agreement have agreed that the default interest rate will be changed in accordance with the change in the prime rate determined by the central bank of a Member State and published in an official gazette easily accessible to everyone, a reference in the credit agreement to that prime rate shall be sufficient, provided that the method of calculating the rate of default interest in accordance with the prime rate is described in that agreement. In this respect, two requirements must be observed. First, the presentation of this calculation method must be easily understandable to an average consumer who does not have financial expertise and enable him to calculate the default interest rate based on the information in the credit agreement. Secondly, the frequency of change of this prime rate, which depends on national provisions, must also be indicated in the credit agreement in question.

(4) Article 10(2)(r) of Directive 2008/48 must be interpreted as meaning that the credit agreement must state the method for calculating the compensation due in the event of early repayment of the loan in a specific and easily comprehensible manner for an average consumer, so that he can determine the amount of the early repayment penalty on the basis of the information provided in that agreement.

(5) Article 10(2) of Directive 2008/48 must be interpreted as not requiring the credit agreement to indicate all situations in which the parties to the credit agreement are granted a right of cancellation not by that directive but only by national legislation.

(6) Article 14(1) of Directive 2008/48 must be interpreted as precluding the creditor from relying on a plea of forfeiture against the consumer's exercise of the right of cancellation under that provision where one of the mandatory particulars provided for in Article 10(2) of that directive was neither included in the credit agreement nor subsequently properly communicated, irrespective of whether the consumer was aware of his right of cancellation without being responsible for that lack of knowledge.

(7) Directive 2008/48 must be interpreted as meaning that, where the consumer exercises his right of cancellation under Article 14(1) of Directive 2008/48, the creditor may not presume an abuse of rights where one of the mandatory particulars provided for in Article 10(2) of that directive was neither included in the credit agreement nor duly communicated subsequently, irrespective of whether the consumer was aware of his right of cancellation.

8) Article 10(2)(t) of Directive 2008/48 must be interpreted as meaning that the credit agreement must indicate the essential information concerning any out-of-court complaint or redress procedures available to the consumer and, where applicable, the costs associated with those procedures, whether the complaint or redress is to be submitted by post or electronically, the physical or electronic address to which the complaint or redress is to be sent and the other formal requirements to which the complaint or redress is subject. As far as this information is concerned, a mere reference in the credit agreement to a set of procedural rules available on the internet or to any other document or document setting out the modalities of the out-of-court complaint and redress procedures is not sufficient.

Source: ECJ press release v. 09.09.2021