What are loan processing fees?
When you apply for a loan, fall as part of the processing costs for the lender – i.e. the bank or the lending company. It doesn’t matter what kind of loan it is: whether it’s immediate building society financing, a car loan or another loan. These processing fees are independent of the interest and installments to be paid; they are treated as a separate amount.
For example, will A credit check is usually carried out. This is to assess your economic situation and to ensure that you are fundamentally able and willing to repay the loan later.
Account fees may also apply during the loan phase. Depending on the type of loan, for example Closing Fees and Withdrawal Deductions. Collective terms for various apportioned costs are: loan fees, processing commission or fee, individual contribution and loan processing fees – these terms are usually used synonymously.
*Detailed information on services, in particular on exclusions, can be found in the respective conditions of the card product.
Federal Court of Justice declares processing fees inadmissible
As early as 2014, the Federal Court of Justice (BGH) declared that banks and companies Loan processing fees are not allowed in most cases (Az. XI ZR 405/12 and XI ZR 170/13). This also applies if these fees are included in the General Terms and Conditions (GTC).
The creditworthiness of potential borrowers is checked in the interests of the lender, just like the preparation of the conclusion of the contract and the processing of the loan agreement. According to this, the processing of a loan is not to be regarded as a separate service – as which it was billed.
This judgment was followed by others in the interests of consumers. So are individual contributions for consumer credit (Az. I-6 U 32/12), loan fees for building savings contracts (Az. XI ZR 552/15) and account fees also not permitted in the loan phase of home savings contracts (Az. XI ZR 308/15).
The courts wanted to give credit customers a chance to be reimbursed for these credit processing fees afterwards – regardless of their exact designation. Therefore, for all loans concluded after 2004, the beginning of the usual three-year limitation period scheduled for the end of 2011. As a result, this deadline for all fees unlawfully paid between 2004 and 2011 did not expire until December 31, 2014.
Exceptions to the BGH judgment
Some forms of fees have not yet been mentioned in case law, while others have been expressly approved by the Federal Court of Justice.
Unlike loan fees and account fees during the loan phase allows the BGH conclusion fees for home savings contracts. These are part of the structure of services and consideration of the home savings contract. According to the Federal Court of Justice, they are not an ancillary service that is legally owed by the building society, but a calculated part of the main contractual service.
In the case of interest-free student loans from the KfW, the BGH allows the loan offices of the student unions administration costs of five percent to be raised (Az. XI ZR 505/21).
Also Payment deductions for KfW loans may be permitted: if the loan was taken out before June 11, 2010 and is used for the earmarked granting of particularly favorable funds to promote economic policy goals (Az. XI ZR 454/14).
Since such a KfW loan – in this specific case a solar power subsidy loan – is not a conventional loan, but a Loan from subsidized funds from KfW act, the plaintiffs would not be unduly disadvantaged thereby. There is also greater processing effort due to the increased communication with KfW as part of the examination of the funding requirements, which is not only in the interest of the bank (Az. XI ZR 63/15). In the case of KfW loans concluded after June 11, 2010, however, the payment deduction is ineffective (Az. XI ZR 96/15).
Good to know
Borrowers are not only entitled to reimbursement of unjustly paid loan processing fees: According to Section 288 of the German Civil Code (BGB), they are entitled to default interest of 5 percent above the base rate for the amount to be reimbursed.
This is because the repayment of inadmissible loan processing fees according to § 818 BGB is the surrender of unlawful enrichment – and this must also include the benefit derived from it.
With fees paid of EUR 1,000 and a base interest rate of -0.88 percent, you could also claim the following interest for 2022 alone:
1.000 Euro x (-0,0088 + 0,0500) = 1.000 Euro x 0,0412 = 41,20 Euro
How to get your loan processing fees refunded
If you find that one of your loans has been charged illegal processing fees, you can claim them back. However, one applies limitation period of three years – This means that in order to be entitled to reimbursement of the loan processing fees, the contract must have been concluded no more than three years ago.
Now you can Make claims against the lender in writing. This letter should contain the following:
- Request for reimbursement of the loan fee
- Reference number of the BGH reference judgment
- Agreement number of the loan agreement
- amount of fees paid
- Account details of the account to which the repayment is to be made
- Deadline within which you expect payment
By reading the letter as registered mail with return receipt send it, you can make sure that the lender received it. To support consumers, Stiftung Warentest has created a sample letter that you can use to claim back loan processing fees.
Refund despite the statute of limitations?
According to § 215 BGB, loan processing fees can be reclaimed despite the expiry of the limitation period. The most important requirements for this are that the loan in question has not yet been repaid and that you must be able to repay it at any time. In these circumstances, processing fees may be offset against full loan repayment.
Unacceptable credit processing fees: Better to claim them back
Since 2014, most loan processing fees have been illegal, with a few exceptions. Within a limitation period of three years, you can demand repayment from the lender, including any interest accrued. But even after this period, the inadmissible processing fees can be offset against the full loan repayment, provided that the loan has not yet been repaid.
FAQ: Frequently asked questions and answers
Are loan processing fees legal?
Since a ruling by the Federal Court of Justice in 2014, most loan processing fees have been inadmissible.
How long can I claim back the processing fee?
Borrowers can claim back unlawfully paid loan processing fees within a period of three years.
Can I charge processing fees?
The lowest processing fees for a loan are allowed. Exceptions to the BGH ruling apply to the closing fees for home savings contracts and for loans taken out with KfW before 2010.
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