Many credit brokers lure people into credit traps in advertisements with “loans without Schufa” or “unbureaucratic, problem-free instant loans”.
When money is tight, quick loans are attractive
When money is tight, such offers seem very attractive at first glance. Especially for people with poor creditworthiness whose house bank no longer grants regular loans.
On the occasion of World Consumer Day, the board of the North Rhine-Westphalia Consumer Center, Wolfgang Schuldzinski, said:
“As a result of inflation and the energy price crisis, more and more people are finding themselves in acute payment difficulties. For some people, taking out a loan seems like a quick solution to regain their financial breathing space. However, it often leads consumers into a cost spiral of high interest rates and hidden additional costs.”
Wolfgang Schuldzinski, board member of the North Rhine-Westphalia Consumer Center
The consumer advocate also sees a need for politics here:
“In Germany there is currently no functioning cost cap that protects consumers from excessive credit costs and usurious interest rates.”
Wolfgang Schuldzinski, board member of the North Rhine-Westphalia Consumer Center
Be careful with dubious providers of quick money
Anyone who comes across a dubious credit provider must expect enormous additional costs. Small loans in particular, which are intended to make small amounts of money available quickly, can be very expensive. High interest rates of up to almost 15 percent are not uncommon. Consumers are often charged for additional so-called “additional services” so that the money is paid out particularly quickly, for example within 24 hours.
Particular caution is required when consumers receive offers that are described as “financial restructuring”. There is often no loan at all behind these offers. Instead, consumers should pay high costs for services that are mostly worthless.
“In their distress, many people end up with expensive loans with high additional costs, which do not solve their problem and actually make their financial situation worse.”
Wolfgang Schuldzinski, board member of the North Rhine-Westphalia Consumer Center
But caution is also advised with other credit providers. A credit line that is taken out via a credit card can have an effective annual interest rate of over 16 percent. The well-known overdraft can also become a cost trap if it is not quickly balanced out. If the overdraft facility is used regularly to cover monthly living expenses, with interest rates of around 10 percent or more, it can lead to over-indebtedness.
Put a stop to usurious interest rates
Consumers are currently only inadequately protected from excessive credit costs. Only the immorality jurisprudence has so far set certain limits. A loan agreement is considered immoral if there is a noticeable disproportion between performance and consideration and the lender consciously exploits the borrower's weaker position.
“However, the case law is complicated, highly dependent on individual cases and only takes newer consumer protection regulations into account to a limited extent. A real cost cap must be clear, effective and legally secure for consumers. We therefore demand that the legislature sets a reference interest rate for every form of consumer credit, which is adjusted at regular intervals. If this is exceeded by a certain value, lending is immoral because it is usurious.”
Wolfgang Schuldzinski, board member of the North Rhine-Westphalia Consumer Center
At European level, a “cost cap” for consumer credit costs was discussed as part of the revision of the Consumer Credit Directive. “As a result, however, the opportunity to implement this at EU level as effective protection against usurious interest rates has been missed,” said Schuldzinski.
If you are in financial distress, seek professional help
In principle, consumers in financial difficulties should check alternative solutions before taking out a loan and, if in doubt, seek professional help. The central contact points for this are the debt advice centers recognized by the supervisory authority - which are, if possible, free of charge. Specialists can help those affected to get an overview of their finances, prioritize outstanding payments, identify savings options or identify potential claims for government transfer benefits.
Further information and links
Further information about credit traps can be found at www.verbraucherzentrale.nrw/kreditfallen
Source:
North Rhine-Westphalia Consumer Center
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