“It would have been possible to react differently at that point, and then it would have been uncovered a year and a half earlier.”
THE EUROPEAN COURT OF JUSTICE HAS RULED: MILLIONS OF LOAN AGREEMENTS REVOCABLE
In its judgment of September 9, 2021, the European Court of Justice ruled that almost every loan agreement is revocable even years after it was concluded due to insufficient mandatory disclosures. The CJEU thus followed the view that insufficient information was provided in many private loan agreements. This exercise of the so-called “perpetual right of revocation” has the consequence that both the loan agreement and the actual purchase agreement are reversed and the consumer receives his money back in return for the return of the object of purchase.
Using the example of a car loan, it immediately becomes clear the enormous opportunity this offers consumers: It is nothing less than the possibility of being able to return their vehicle without loss, irrespective of the diesel scandal, if the purchase was financed via a loan!
FAR-REACHING IMPLICATIONS, NOT ONLY FOR CAR LOAN AGREEMENTS
In general, it can be said that the CJEU’s decision could allow consumers to exit a financing agreement early and thus gain an immense financial advantage. The banks are now threatened with a huge wave of revocations, not only for car loans, but in principle for any financed consumer goods.
Although the cases underlying the referral orders are actually purchases of vehicles affected by the emissions scandal that were financed via Volkswagen Bank GmbH, the CJEU referral affects any financed purchase, no matter how large (home theater system, washing machine) or small (cell phone) it may be.
Consumers should therefore find out now what a possible course of action might look like in their specific case.
FAULTY WORDING: ALMOST ALL CONSUMER LOAN AGREEMENTS AFFECTED
The wording used by Volkswagen Bank GmbH in its loan agreements can be found in various formulations in almost every consumer loan agreement concluded in Germany between June 11, 2010 and today.
With the decision of the Ravensburg Regional Court to submit the formulations used to the CJEU for review, banks are now facing a renewed wave of revocations. As recently as November 2019, a ruling by the German Federal Supreme Court (BGH) made it look, at least in part, as if “late” revocations could be averted with the legal argument of forfeiture or abuse of the right of revocation.
PREVIOUS RULINGS OF THE BGH: CONSUMER UNFRIENDLY
Specifically, on November 5, 2019, the Federal Court of Justice (BGH) had rejected the appeals of two car buyers and ruled that consumers cannot revoke their car loans years after the conclusion of the contract (ruling of November 5, 2019, XI ZR 650/18 and XI ZR 11/19). Although this ruling only referred to the contract forms examined in detail (BMW Bank, Ford Bank), it was nevertheless a deeply consumer-unfriendly ruling and weakened the legal position of consumers.
As part of its decision-making process, the CJEU, which is considered to be consumer-friendly, has now also addressed the BGH case law and provided legal certainty. With the ECJ’s decision, it is now clear that the BGH ruled contrary to European requirements last year. Millions of consumers could then benefit massively financially from a consumer-friendly decision by revoking their loan agreements.
PERPETUAL RIGHT OF REVOCATION: THE UNLIMITED RIGHT OF REVOCATION FOR CONSUMERS
If, in the case of contracts concluded after June 11, 2010, the financing bank has used incorrect revocation information or has omitted mandatory information required by law, (car) buyers can still revoke and reverse the contract after the 14-day revocation period has expired, even after years! The consumer is then entitled to the so-called “perpetual right of withdrawal”, because the period had never begun to run.
In particular, many consumers finance the purchase of a vehicle through a car loan. Very often, the convenient offer of the car manufacturer to handle the financing directly through the in-house bank is used. But unlike most other consumer loans, this adds a special feature to the car loan: the selling car dealership becomes the intermediary for the loan, because it prepares the contract, uses the forms provided by the bank for this purpose, and ultimately concludes it. Through this involvement of the seller, a loan revocation then also has the effect that the car buyer is no longer bound to the vehicle to be financed.
Revoking the loan thus offers the chance to get rid not only of the car financing alone, but also of the car itself. In this case, the vehicle goes to the bank, further installment payments by the borrower no longer apply, the bank must refund all installments already paid and any special payments, and no compensation for use must be paid. However, the bank retains the contractually agreed interest.
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