EN    EN  COMMISSION OF THE E UROPEAN COMMUNITIES 
Brussels, 23.11.2005 
COM(2005) 483 final/2 
2002/0222(COD)  
CORRIGENDUM: Annule et remplace la page de couverture et la première page de l’acte du 
document COM(2005) 483 final, du 7.10.2005. 
Cette correction concerne les versions 
linguistiques suivantes: CS, DA,  EL, EN, ES, ET, FI, HU, IT, LT, LV, MT, NL, PL, PT, SK, 
SL et SV 
Amended proposal for a 
DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 
on credit agreements for consumers amending Council Directive 93/13/EC 
(presented by the Commission pursuant to Article 250(2) of the EC Treaty) 
 
EN 2   EN EXPLANATORY MEMORANDUM  
1. PROCEDURE  
The Commission adopted on 28th October 2004 a modified proposal for a Directive 
on Consumer Credit following the opinion vo ted by the European Parliament (EP) on 
20 April 2004. 
After the modified proposal was publis hed, the Commission continued consultation 
with Member States and stakeholders. As a result, the Commission concluded that a 
consolidated text would be useful. In add ition the consultations showed the need for 
further substantial modifications in or der to avoid unintentionally burdening 
consumer credit business whilst at the same  time ensuring a high level of protection 
for consumers. In particular: 
• The Forum Group of experts on mortgage s set up by the Commission had issued 
its final report, which contributed to th e decision to exclude all mortgage credit 
from the scope of the proposal. 
• The duty to offer advice to the consumer  in the pre-contract ual stage has been 
clarified and adapted to the circumstances of the credit offer. 
• The flexibility associated with certai n provisions is coupled with a mutual 
recognition clause aimed at ensuring that any differences in the resulting transposition will not constitute an obstacle to the internal market. 
2. O
BJECTIVES  
The Commission has three main objectives  in the area of consumer credit:  
– establishing the conditions for a genuine internal market,  
– ensuring a high level of consumer protection, and  
– improving the clarity of EC regulation by recasting the three existing 
Directives on consumer credit (8 7/102/CE, 90/88/CE and 98/8/CE).  
These objectives are in  line with the Lis bon Strategy, as the development of an 
internal market in credit will increase the competitiveness of EU creditors by 
enhancing competition and pr omoting product innovation.  
Harmonisation of consumer protection provi sions in the area of retail financial 
services, coupled with targeted mutual  recognition, is a key aspect of the 
Commission strategy for developing the retail financial services market. The latter is a natural follow-up to the introduction of a single currency, which removes the 
exchange rate risk between euro-zone count ries and renders price comparisons more 
transparent. Transfer costs between euro zone countries  have been considerably 
reduced following the introduction of  Regulation 2560/2001. This will be 
supplemented by further integration of EU payments systems, making regular 
 
EN 3   EN payments throughout the euro-zone as easy as currently nationally. Cross-border 
loans, requiring period cross-border repaymen t stand to especially benefit from these 
developments. 
3. AVAILABLE OPTIONS  
The Consumer Credit Directive 87/102/EC, based on minimum harmonisation, 
resulted in Member States going beyond th e Directive’s provisi ons to a different 
extent. As the relevant provi sions are mostly of a mandato ry nature, these differences 
in national legislations constitute obstac les to the internal market and dissuaded 
business to offer pan-European products. 
Consequently, a legislative initiative wa s the only available option to meet the 
objectives. 
4. IMPACT OF THE DIRECTIVE  
4.1. Impact on competitiveness 
• The market for credit has a potential to develop; only a small part of it is currently 
cross-border. The considerable overall si ze of the credit ma rket masks a large 
diversity between markets, where levels of  consumer credit vary considerably. For 
example, while the UK market amounts to some €230 billion, this contrasts with just €40 billion in a similar sized countr y, Italy. The average use of credit per 
household varies largely as well
1. In some Member States, consumer credit 
accounts for a large part of the households ’ available income, in others it is 
relatively small.2 Some markets have little potential to expand further, whereas 
others have still great potential to develop.  
• The possibility to offer credit contracts throughout the EU should result in 
improved efficiencies and economies of scale for banks and a cheaper and wider 
selection of products for customers. Le nders will be able to design pan-EU 
consumer credit products, which do not necessarily have to comply with 25 sets of domestic rules.  
• New business opportunities are arising to harness the potentia l of the internal 
market – technology (in particular the Inte rnet) allow consumers and creditors to 
contract at a distance, new demand for cred it may arise from the increase in retail 
sales over the Internet, growth in access to  Internet is stimulating remote banking. 
4.2. Impact on competition 
• Facilitating access to credit ma rkets may stimulate competition in certain markets 
where at present a few players dominat e and consumers enjoy reduced access to 
                                                
 
1 From 942€ in Spain, 3,000€ to 3,500€ in Belgium, Germany or France, up to 9,408€ in Sweden and 
almost 18,000€ in the UK (2002 figures). 
2 From 7% in Greece, 10% in Spain or France, 16 % in Germany and Portugal, up to respectively 26% 
and 28% in Sweden and in  the UK (2002 figures). 
 
EN 4   EN credit. Stimulating competition should impr ove efficiency of credit institutions in 
an increasingly global economy.  
4.3. Impact on consumers 
• Enhanced competition and opening of nati onal markets to foreign creditors will 
lead to lower interest rates for consumers.  Prices of consumer credit vary widely 
according to the creditor and from one Member State to another, and consumers should be put in a position to  take advantage of offers  throughout the EU territory. 
• Removal of barriers to competition will lead to a broader range of offers and 
improved products. The level of innovation is already quite high in some Member States, however certain credit products av ailable in a given Member State can, in 
many cases, not be sold elsewhere in the EU . It is the interests of consumers to 
have access to all credit products available in the EU , while being guaranteed a 
high level of information and protection.  
• Harmonisation of certain key elements of  the consumer credit agreement will 
improve consumer confidence and enc ourage consumers to buy credit across 
borders in the EU. The current low leve l of cross-border consumer credit 
agreements is also due to concerns rega rding the level of consumer protection in 
foreign Member States. 
5. 
MAIN CHANGES COMPARED TO THE MODIFIED PROPOSAL OF 28TH OCTOBER 2004 
5.1. Aim 
Article 1 clarifies that only certain aspects of the area are dealt with in the Directive. 
This is in line with the views expressed by various stakeholders in the consultation 
process. 
5.2. Definitions 
5.2.1.  Overdrafts 
The question of overdrafts needed  clarification. In particular , in order to create legal 
certainty, the present modified proposal provides a definition corresponding to the 
usual practice in Member States.  
5.2.2.  Total cost of credit 
The definition of the total cost of credit is  redrafted in line with the comments of EP 
and industry. The objective is to include only those costs corres ponding to services 
concluded with or via the cr editor. This definition serves  as basis for the calculation 
of the Annual Percentage Rate of Charge (APR). The total lending rate is deleted as 
requested by stakeholders and the EP, as it might have been confusing for 
consumers. 
 
EN 5   EN 5.3. Scope 
5.3.1.  Mortgage credit agreements 
The first modified proposal covered equ ity releases, while excluding credit 
agreements concluded for housing purposes . However, determining the purpose of a 
loan is very difficult for the creditor, if not impossible, as he has no control on the 
use of the money he lends. In addition, mort gage credit agreements in general are 
very specific instruments with particular  features which requi re to be addressed 
separately, irrespective of the purpose of the loan. Therefore, the Commission has 
excluded equity release from the scope, This corresponds to an EP amendment 
strongly supported by industry.  
5.3.2.  Surety agreements, guarantors 
Surety agreements are now excluded from th e scope, as the main issue in relation to 
sureties was linked to the que stion of mortgage credit. 
Guarantors are excluded from the scope as  well. The Directive deals with credit 
agreements only; it is more opportune not to  deal with specific aspects of contract 
law which are regulated in a larger contex t in the Member States. Both exclusions 
correspond to EP amendments, and meet con cerns put forward by the banking sector.  
5.3.3.  Overdrafts 
The EP as well as the European banking i ndustry have argued that overdrafts are 
valued for simplicity and low cost, and therefore, need not to be subject to the full range of requirements for credit agreements. They are therefore submitted to a light regime only. However, a sufficient level of information is necessary. Overdrafts are 
therefore subject to a limited number of  contractual information requirements. 
5.3.4.  Agreements above 50 000 € 
Further to discussions with stakeholders, agreements above 50 000 € are excluded as 
they are generally not concluded for c onsumption purposes but rather for housing 
purposes, and therefore do not require the sa me type of legislation as the average 
consumer credit. A revision clause regard ing the applicable thresholds has been 
introduced so as to allow for an adjustment of the credit thresholds covered by the Directive to the economic trends in the EU and the development of the market.  
5.4. Pre-contractual information 
As advertising is already dealt with by the Directive on Unfair Commercial Practices 
(2005/29/EC), the Commission only proposes a list of mandatory information elements to be mentioned in advertising containing financial information on credit. 
General advertising on a given credit service is not concerned, which avoids 
unnecessary burden on businesses. 
Pre-contractual information allows consum ers to compare offers. However, various 
stakeholders in the consultation proce ss were concerned that an excess of 
information may be confusing. Some pre-c ontractual information requirements have 
therefore been deleted in the present m odified proposal. Further, following requests 
 
EN 6   EN from the banking sector, the present modifi ed proposal aims at ensuring consistency 
with information requirement s in existing EC law.  
The lender is requested to assess the c onsumer’s creditworthiness on the basis of 
information disclosed by the latter and, wh ere appropriate, consu ltation of databases. 
Against the background of broad consultatio n of the banking s ector, the Commission 
does not perceive that this gives rise to any additional costs for banks as it corresponds to good banking practice. 
The concept of a duty to advise was modifi ed. Contrary to some requests from the 
banking industry, the Commission maintains the concept that a creditor should not 
merely fulfil the pre-contractual inform ation requirements, but should provide 
additional explanations in order to enable  the consumer to take a well-informed 
decision. However, in response to a reque st from the banking sector and some 
Member States, it was clarified that the cons umer is always responsible for his final 
decision to conclude a credit agreement. Therefore, the reference to advice is 
specified as a duty to put the consumer in  a position to assess the advantages and 
drawbacks of the loan. In addition, Member States have been gi ven more flexibility 
to adapt their implementation law to  the situation on their markets.  
5.5. Contractual information 
The provisions on contractual informati on require mainly information already 
provided at the pre-contractual stage plus in formation on how to exercise the right of 
withdrawal and the right of early repaym ent. This is in line with usual good 
professional practice and will not create si gnificant additional costs for creditors. 
In case of a variable rate, the consumer s hould be informed of significant changes to 
the borrowing rate. However, it is in practice impossible to inform him of every change, as in certain cases the rate can change slightly ever y day. Therefore, the 
present modified proposal foresees that c onsumers should be informed periodically 
and at least immediately in cas e of a significant change.  
5.6. Database access 
The obligation to set up national database s has been deleted, since this would go 
beyond the purpose of this Directive. Issues  relating to data protection are already 
dealt with in the Data Protection Direct ive 95/46/EC. Therefore, the Commission 
proposes to guarantee only a mutual access to  existing private and public databases 
on a non-discriminatory basis, which doe s not involve additional costs for the 
industry as the previous provision but, on the contrary, will help lo wering a barrier to 
cross-border consumer credit. 
5.7. Right of withdrawal 
The present proposal foresees a possibility for consumers to  withdraw from the credit 
agreement within 14 days. This delay allows consumers to shop around after conclusion of the agreement and possibly to  find a better offer. This provision is 
intended to enhance competition. It corresponds  to existing practice in most Member 
States, although the length of the period may vary. The length of the withdrawal 
period corresponds to the Distance Mark eting Financial Services Directive 
 
EN 7   EN (2002/65/EC). As a consequence, at least for consumer credit agreements which are 
also marketed by distance means, it will not involve additional costs for creditors. 
5.8. Linked transactions 
The present proposal foresees that in case of linked transactions, when the consumer 
has a right to withdraw from the purchase ag reement, he also has a right to withdraw 
from the linked credit agreement. This pr ovision aims at avoiding that consumers 
have to keep a credit even when its very  purpose has disappeared. However, the right 
to withdraw from the credit does not give  a right to withdraw from the purchase 
agreement.  
5.9. Early repayment 
The present proposal grants the consumer a right to repay his cr edit earlier than 
initially agreed. However, early repaymen t has a cost for creditors. Therefore, 
following consultations with stakeholders a nd Member States, the proposal foresees 
that creditors may charge fair and objectiv e fees to compensate the loss. Since the 
calculation of the compensation should be ma de on an objective basis, it is expected 
that this provision would only enta il marginal costs for creditors. 
5.10. Unfair terms 
The proposal contains two examples of unfai r terms specific to cr edit agreements and 
modifies the annex of Directive 93/13/EEC on unfair terms in consumer contracts. 
The impact on industry, if a ny, will be very low, as the examples provided are in 
clear contradiction with us ual good professional practice. 
5.11. Harmonisation 
In general, both harmonisation and mutual  recognition have contributed to EU 
market integration, while ensuring that c onsumer interests are taken into account. 
The policy mix chosen in a given area invariably depend s on the characteristics of 
that area and should be decided on a case-by-case basis. Finding the right mix 
requires an application of the proportionali ty principle in designing a solution, 
combining where appropriate harmoni sation with mutual recognition.  
Against this background, the Commi ssion suggests to maintain the full 
harmonisation approach, with a degree of fl exibility for Member States in certain 
areas. Full harmonisation remains the optim al way to establish a genuine single 
market in consumer credit that allows bus inesses to offer consumer credit across 
borders while at the same time guaranteei ng an appropriate high level of consumer 
protection regardless where a credit agreem ent is entered into throughout the EU. 
The proposal now clarifies that only those el ements explicitly dealt with in the text 
are fully harmonised whereas issues such as joint and several liability are left to the national legal systems. 
In some cases, the proposal gives leeway to national implementation, mainly due to 
existing heterogeneity as rega rds national markets or national legislation. This is the 
case, for instance, in the context of ear ly repayment or overrunning. However, it is 
also necessary to ensure that the de gree of flexibility provided for national 
 
EN 8   EN implementation within the limits of the Directive does not contribute to raise 
additional barriers to the single market  in consumer credit. Therefore, the 
Commission complements its full harmonisa tion approach with mutual recognition 
for a limited number of issues. This help s to reduce burden on businesses who want 
to offer consumer credit across borders. 
As a result of the proposed provision on mu tual recognition, a creditor would only 
have to comply, for an activity in anot her Member State than the one he is 
established in, with legal requirements of its Member State of origin (or equivalent ones) and not with those of the host Member State. In the area of contract law, this 
could lead to another result than forseen by Article 5 of the Rome Convention. In an 
Article 5 situation, which would lead to th e application of the law of the country 
where the consumer has his habitual residen ce, this latter law may establish standards 
that, in relation to the equi valent standards applicable in an incoming creditor’s home 
country, restrict that credito rs activity, for instance by be ing higher (or different) than 
his home country standards. In that case, if  areas mentioned in the mutual recognition 
clause are concerned, the host Member State has to ensure that the said standards 
would not apply to the contra ct. Either the law chosen by the parties, or, in the 
absence of such a choice, the requirements of the creditor’s home country law would 
continue to apply. 
The areas concerned by the mutual recognit ion clause are explicitly listed in the 
present proposal. As regards Article 15 a nd 17 on early repayment and overrunning, 
a phasing-in period has been introduced in or der to allow Member States to adapt. 
5.12. Examples 
The illustrative examples for calculation of the APR as foreseen in former Annex II 
of the proposal have been deleted in vi ew of the Commission’ s overall target of 
better regulation and in order not to over-bur den the legislative procedure. If these 
examples are considered as helpful assist ance in calculating the APR, they may be 
published separately once the Directive is adopted. 
 
EN 9   EN 2002/0222(COD) 
Amended proposal  for a 
DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 
on the harmonisation of the laws, regulati ons and administrative provisions of the 
Member States concerning  credit agreements for consumers amending Council 
Directive 93/13/EC  
THE EUROPEAN PARLIAMENT AND THE CO UNCIL OF THE EUROPEAN UNION, 
Having regard to the Treaty establishing th e European Community, and in particular 
Article 95 thereof, 
Having regard to the proposal from the Commission3, 
Having regard to the opinion of the Eu ropean Economic and Social Committee4, 
Acting in accordance with the procedure laid down in Article 251 of the Treaty5 
Whereas: 
(1) Council Directive 87/102/EEC of 22 December 1986 for the approximation of the 
laws, regulations and administrative prov isions of the Member States concerning 
consumer credit6 lays down rules at Community level concerning consumer 
credit agreements.  
(2) (1) In 1995, the Commission presented a report7 on the operation of Council  Directive 
87/102/EEC of 22 December 1986 on for the approximation of the laws, regulations 
and administrative provisions of the Member States concerning consumer credit, following w
hich it  and undertook a very  broad consultation of th e interested parties. 
In 1997, the Commission it presented a summary report of reactions to the 1995 
report8. A second report9 was produced in 1996 on the operation of Directive 
87/102/EC, as amended by  Council  Directive 90/88/EEC of 22 February 1990 
amending Directive 87/102/EC on the approx imation of the laws, regulations and 
administrative provisions of the Member  States concerning consumer credit.  
                                                 
3 OJ C , p. . 
4 OJ C , , p. . 
5 Opinion. 
6 OJ L 42, 12.2.1987, p. 48. Directive as last amended by Directive 98/7/EC of the European Parliament 
and of the Council (OJ L 101, 1.4.1998, p. 17). 
7 COM(95) 117 final. 
8 COM(97) 465 final. 
9 COM(96) 79 final. 
 
EN 10   EN (3) (2) Thoese reports and consultations revealed su bstantial differences between the laws 
of the various Member States in the field of credit for natural pe rsons in general and 
consumer credit in particular. An aAnalysis of the national laws transposing Directive 
87/102/EEC shows that Member States have considere d the degree of protection 
offered by the Directive to be inadequate. Th ey have therefore taken account, in their 
implementing legislation, of other types of  credit and new types of credit agreement 
not covered by the Directive. Consequently, it is necessa ry to anticipate the reforms of 
national legislation envisaged by several Me mber States and to make provision for a 
harmonised Community framework.  use a number of consumer protection  
mechanisms, in addition to the Directive 87/102/EEC, on account of differences in 
the legal or economic situat ion at national level.  
(4) (3) The de facto and de jure situation result ing from those national differences leads to 
distortions of competition among cr editors in the Community and obstacles to the 
internal market where Member States  have adopted different mandatory 
provisions more stringent than those foreseen in Directive 87/102/EEC. It restricts 
consumers’ scope for ability to make direct use of the gradually increasing 
availability of cross-border credit  obtaining cred it in other Member States . Those 
distortions and restrictions in turn affect the scale and nature of the demand for cross -
border credit, which may in turn have consequences in terms of the demand for goods 
and services. A further e ffect of the differences between national laws and practices is 
that consumers do not enjoy the same  protection in all Member States.   
(5) (4) In recent years the types of credit offere d to and used by consumers have evolved 
considerably. New credit inst ruments have appeared, an d their use continues to 
develop. It is therefore necessary to adapt,  amend and complete the  existing provisions 
and to extend their scope, where appropriate . 
(6) In accordance with Article 14(2) of the T reaty, the internal market comprises an 
area without internal frontiers in whic h the free movement of goods and services 
and freedom of establishment are en sured. The development of a more 
transparent and efficient credit market with in the area without internal frontiers 
is vital to promote the developm ent of cross-border activities.  
(7) In order to facilitate the emergence of a well-functioning internal market in 
consumer credit, it is necessary to make  provision for a harmonised Community 
framework in a number of core areas. In view of the continuously developing 
market in consumer credit and the increa sing mobility of European citizens, 
forward-looking Community legislation which is able to adapt to future forms of 
credit and which allows Member States th e appropriate degree of flexibility in 
their implementation should help to esta blish a modern body of law on consumer 
credit.  
 
EN 11   EN (8) (5) It is also necessary to promote the crea tion of a more transparent and efficient 
credit market. It is important that this the market should offer a sufficient  degree of 
consumer protection suc h that  to ensure consumer confidence.  Thus,  the free 
movement of credit offers can take pl ace under optimum condi tions for both those 
who offer credit and those who require it , with due regard to specific situations in 
the individual Member States.  
(9) This ne cessitates a process of maximum  Full  harmonisation  is necessary  in order to 
assure all consumers in the Community of a  high degree of a high and equivalent 
level of  protection of their interests and an  equivalent level of information.  and in 
order to create a genuine internal market . Member States should  therefore not be 
allowed to maintain or introduce national  provisions other than those laid down 
in this Directive. However, such restri ction should only apply where there are 
provisions harmonised in this Directive.  Apart from the provisions harmonised 
by this Directive, Member States should  remain free to maintain or introduce 
national legislation. Accordingly, Member States may, for inst ance, maintain or 
introduce national provisions on joint and several liability of the seller or supplier 
of services and the creditor. Another example of this possibility for Member 
States could be national provisions in troducing or maintaining a right of 
withdrawal from the contract of sale of goods or supply of  services if the 
consumer exercises his right of withdrawal from the credit agreement. In the case 
of specific credit agr eements to which only certain provisions of this Directive are 
applicable, for instance, in the case of overdrafts and certain other specific credit 
agreements, Member States should remain free to regulate, in their national 
legislation, such types of credit agreements regarding other aspects not 
harmonised by the Directive . 
(10) Even in some areas harmonised by this Directive, national implementing rules 
could differ and make it more burdensom e for creditors to provide their services 
across borders. It is appropriate in those cases, taking into account the level of 
harmonisation and of consumer protection ensured by this Directive, and with a 
view to a well-functioning internal ma rket, to avoid additi onal burdens on 
creditors, in particular as regards the n ecessity to comply wi th rules that go 
beyond those of the Member State where th ey are established. Therefore, the 
principle of mutual recognition shou ld apply in certai n cases which are 
exhaustively listed in this Directive. In  those cases, the principle of mutual 
recognition implies that the rules of th e law of the Member State in which the 
consumer has his habitual residence are se t aside if its application to a given 
situation constitutes a restriction of  the free circulation of services.  
 
EN 12   EN (11) In certain cases where the principle of mu tual recognition applies, this Directive 
provides for a transition period. Such a period should allow Member States to 
gain sufficient experience of the functionin g of implementing legislation and it 
also should enable economic operators  to adapt to a new legal framework 
following the implementation of this Di rective before mutual recognition applies.  
(6) In view of the growin g diversity among the types of cr edit and credit providers, any 
person who provides a creditor with informa tion allowing a consumer to be identified 
and who assists in the conclu sion of a credit agreement for a remuneration must be 
regarded as a credit int ermediary, regardless of th e form of such remuneration. 
However, lawyers and notaries should not, in pr inciple, be regarded as credit 
intermediaries where the consumer contacts them for advice on the scope of a credit 
agreement or if they help to draft or authenticate an agreement, as  long as their role is 
limited to providing legal or financial advi ce and they do not direct their clients 
towards specific creditors  
(12) Agreements for the provision on a continuing  basis of services or for the supply of 
goods of the same kind and in the same quantity, where the consumer pays for 
them for the duration of their provision  by means of instalments, may differ 
considerably, in terms of the interests of  contractual parties involved, and of 
modalities and performance of  the transactions, from credit agreements covered 
by this Directive. Therefore, it should be clarified that they are not considered as 
credit agreements for the purposes of this Di rective. An example of such types of 
agreement is an insurance contract where the insurance is paid for via monthly 
instalments.  
(13) (7) Credit agreements covering the granting of credit for the purchase or 
transformation of immovable property secured by real estate  should be excluded 
from the scope of this Directive. That type  of credit is of a very specific nature. a nd is 
the subject of a Commission r ecommendation of 1 March 2001 on pre -contractual 
information to be given to cons umers by lenders offering home loans . 
(8) In view of the risks to their financial interests, the situation o f natural persons who 
stand as guarantors for consumers necessitate s specific provisions ensuring a level of 
information and protection comparable  to that provided for consumers.  
(9) Council Directive 84/450/EEC of 10  September 1984 concerning misleading 
advertising and comparative advertising10 is intended to provide  protection with regard 
to the mention of a figure, cost or rate in advertising or advertising offers relating to a 
credit agreement. It requires such figure, cost or rate to be accompanied by c alculation 
details making it possible to assess the figur e in the context of all the consumer’s 
obligations under a credit agreem ent 
                                                 
10 OJ L 250, 19.9.1984, p.  17. Directive amended by Directive 97/55/EC of the European Parliament and 
of the Co uncil (OJ L 290, 23.10.1997, p.18).  
 
EN 13   EN (14) Consumers should be protected against unfair or misleading  practices, in 
particular with respect to the disclosu re of information by the creditor, in line 
with Directive 2005/29/EC of 11 May 2005 of the Council and of European 
Parliament concerning unfair business-to -consumer commercial practices in the 
internal market and amending Direct ives 84/450/EEC, 97/7/EC and 98/27/EC 
(the Unfair Commercial Practices Directive11). However, this Directive should 
contain specific provisions on advertisin g concerning credit agreements as well as  
certain elements of standard information consumers should be provided with in 
order to enable them, in partic ular, to compare different offers.  
(10) In order to ensure real consumer protection, it is necessary to adopt an approach to 
unsolicited doorstep selli ng of credit which is stricter th an that laid do wn in Council 
Directive 85/577/EEC of 20  December 1985 to protect the c onsumer in respect of 
contracts negotiated away from business premises12. 
(11) The provisions of this Directive must apply without prejudice to Directive 95/46/EC of 
the European Parliament and of the Council of 24 October 1995 on  the protection of 
individuals with regard to the processing of personal data  and on the free movement of 
such data13. However, a suitable framework for the collection and processing of 
personal data needed in order to as sess the credit risk  should be envis aged in certain 
cases.  
(15) (14) So In order that  consumers can make their decisions in full knowledge of the 
facts, they must  should  receive adequate information, prior to the conclusion of the 
credit agreement, on the conditions and cost of the credit and on their obligations. To 
ensure absolute the fullest possible  transparency and comparability of offers, such 
information should, in particular, include the annual percentage rate of charge 
(applicable to the credit, illustrated by a representative example, and  the total lending 
rateand determined throughout the Communi ty in the same way. As the annual 
percentage rate of charge can at this stage  only be indicated through an example, 
such example should be representative . Therefore, it should correspond, for 
instance, to the average duration and tota l amount of credit granted for the type 
of credit agreement under consideration and, if applicable, to the goods 
purchased. When determining the represen tative example, the frequency of 
certain types of credit agreement in a specific market should also be taken into 
account.  
(16) Consumers should be informed of any a dditional costs that are compulsory for 
obtaining the credit before the conclusion  of the credit agreement. Even if the 
amount of such costs cannot be determin ed in advance, consumers should receive 
adequate information both in advert ising and at a pre-contractual stage.  
(17) For specific types of credit agreements, howe ver, it is appropriate, in order to 
ensure at the same time an adequate le vel of consumer protection without putting 
an excessive burden on creditors or, where applicable, credit intermediaries, to 
                                                 
11 OJ L 149, 11.6.2005, p. 22. 
12 OJ L 372, 31.12.1985, p.  31. 
13 OJ L 281, 23.11.1995, p. 31.  
 
EN 14   EN restrict the pre-contractual information req uirements of this Directive, taking 
into account the specific charac ter of such types of agreements.  
(18) The consumer needs to be informed co mprehensively before he concludes the 
credit agreement regardless of whether or not a credit intermediary is involved in 
the marketing of the credit. Therefore,  in general, the pre-contractual 
information requirements should also apply when a credit intermediary is 
involved. However, if suppliers of goods a nd services act as credit intermediaries 
in an ancillary capacity, it is not appr opriate to also burden them with the pre-
contractual information requirements as la id down in this Directive. Therefore, 
the pre-contractual information requirements should not apply to such credit 
intermediaries. Suppliers of goods and serv ices may be considered, for example, 
as acting as credit intermediaries in an anci llary capacity if thei r activity as credit 
intermediaries does not amount to a substantial part of their turnover. In those 
cases, full pre-contractual information of  the consumer is still ensured because it 
has to be provided by the creditor.  
(19) Consumers should also act with pr udence and respect their contractual 
obligations.  
(15) In view of the technical and legal complexity of credit instruments, it is necessary to 
impose a general obligation on the credit inte rmediary and creditor to provide advice 
so that the consumer can choose in ful l knowledge of the facts among the types of 
credit offered. Similarly, it is the responsib ility of the creditor, in accordance with the 
principle of “responsible lending”, to check whether the consumer and, where 
applicable, the guarantor are in a position  to meet new commitments.  
(20) Despite the pre-contractual information to be provided, the consumer may still 
need additional assistance in order to decide which credit agreement, within the 
range of products proposed, is the most  appropriate for his needs and financial 
situation. Therefore, Member States sh ould ensure that creditors, and where 
applicable, credit intermediaries, provide  such assistance. Where appropriate, 
the relevant pre-contractual informatio n, as well as the advantages and the 
disadvantages associated with the products  proposed, should be explained to the 
consumer in a personalised manner, in the light of the possible complexity of the 
relevant credit agreement.  
 
EN 15   EN (21) (12) In order to help reduce the credit risk for both the creditor and the consum er, 
experience and practice te stify to the benefits of sufficient and reliable information on 
cases of default. Member States must theref ore ensure that there is a public or private 
central database in their territory, wh ere appropriate in the form of a ne twork of 
databases. Consumers and guarantors in th e Member State who have defaulted should 
be registered in this database or network. With a view to working effectively, creditors 
must be obliged to consult this central database before accepting any commit ment on 
the part of the consumer or guarantor. To prevent any distortion of competition among 
creditors, it must  should  be ensured that persons and businesses creditors  have access 
to the private or public central database s concerning consumers in a  of anothe r 
Member State where they are not established  under the same non-discriminatory  
conditions compared to as persons and businesses creditors  in that Member State, 
either directly or through the central  database of their own Member State.  
(22) In order to enable the consumer to know  his rights and obligations under the 
credit agreement, it should contain all necessary information in a clear and 
concise manner.  
(13) In order to ensure the confidentiality of in formation and protection of personal data, it 
is essential  that the data obtained may be used  solely to assess the risk of non -
performance for the consumer or guarantor.  Any other processing or use of personal 
data obtained through the central database mu st be prohibited. Finally, to avoid any 
risk, the data must  be destroyed immediately afte r the conclusion of the credit 
agreement or the refusal of the application for credit.  
(16) The conditions laid down in a credit ag reement may in some cases be to the 
consumer’s disadvantage. Bette r consumer protection must be  ensured by imposing 
specifying certain conditions which apply to all  the forms of credit covered by the 
Directive. The credit agreement must confirm and add to the information provided 
before the conclusion of the agreemen t, where appropriate with the hel p of an 
amortisation table and details of the charges for defaulting.  
(23) In order to ensure full transparency the consumer should be provided with 
information on the borrowing rate, both  at a pre-contractual stage and when 
concluding the credit agreement. During the contractual relationship, the 
consumer further should be informed of  significant changes to the borrowing 
rate.  
(24) (18) In order to approximate the procedures for exercising the righ t of withdrawal in 
similar areas, it is necessary to make provi sion for a right of withdrawal without 
penalty and with no obligati on to provide justification, un der conditions similar to 
those provided for by the Directive 2002/65/EC of the European Parliament and of the 
Council of 23 September 2002 {…}  onconcerning  the distance marketing of 
consumer financial services and ame nding Council Directives 90/619/EEC, 97/7/EC 
and 98/27/EC14. Before exercising the right of withdrawal, the consumer may 
inform the creditor of his intention to withdraw from the credit agreement, in 
order to allow for re-negotiation of that agreement.  
                                                 
14 OJ L 271, 9.10.2002, p. 16. 
 
EN 16   EN (25) In the case of linked agreements a relatio nship of interdependence exists between 
the purchase of goods or services and th e credit agreement concluded for this 
purpose. Therefore, the exercise of the ri ght of withdrawal in respect of the 
purchase agreement should allow the consum er to withdraw also from the credit 
agreement. In addition, consumers should  be, under certain conditions, allowed 
to pursue remedies against the creditor in  case of difficulties related to the 
purchase agreement. However, the non-co mpliance with such conditions should 
not deprive consumers of their rights gr anted by national provisions applying 
joint and several liability of the seller or  supplier of services and the creditor.  
(26) (21) The consumer should have the right to discharge his obligations before the due 
date in the credit agreement.  In the case of early repayment, either in part or in full, 
the creditor must should  be entitled to claim only a fair and objective indemnity. The 
objective indemnity should compensate th e creditor for the costs directly linked 
to the early repayment and should take into account the interests of both 
contractual parties. only, and provided that such repayment results in a corresponding 
financial loss for  the creditor .  
(27) (23) The transfer of the creditor’s  rights under a credit agreement must should not have 
the effect of placing the consumer or guarantor  in a less favourable position. For the 
same reasons a creditor who offers a credit agreement providing c onstitution of capital 
must assume the risk if the third party provi ding such constitution of capital defaults 
on his obligations.  The consumer should also be properly informed when the 
credit agreement is assigned  to a third party. However, where the assignment is 
effected for securitisation purposes only  and where the initial creditor is, in 
agreement with the assignee, acting as a creditor vis-à-vis the consumer, the 
consumer does not have an important interest to be informed about the 
assignment. Therefore, a requirement at EU  level to inform the consumer about 
the assignment in such cases would be  excessive, but Member States should 
remain free to maintain or introduce such requirements in their national 
legislation.  
 
EN 17   EN (28) (19) In order to promote the establishing a nd functioning of the in ternal market and 
ensure a high degree of protection for c onsumers throughout the Community, it is 
necessary to fine -tune the method of calculating theensure the comparability of 
information relating to  annual percentage rate s of charge throughout the 
Community. Despite the uniform mathem atical formula for calculating the 
annual percentage rate of charge pr ovided for in Directive 87/102/EEC, as 
amended by Directive 98/7/EC, the annual percentage rate of charge is not yet 
fully comparable throughout the Co mmunity. In individual Member States 
different cost factors are taken into account in the calculation thereof. The 
Directive should therefore clearl y define the total cost of  a credit to the consumer. 
The costs associated with an insurance sh ould only be included in the calculation 
of the annual percentage rate of charge if the insurance is com pulsory in order to 
obtain the credit or the advertised intere st rate and is concluded with or via 
either the creditor or  the credit intermediary . and to determine the components in 
the total cost of the credit to be used in the calculation. The annual percentage rate of 
charge is in fact an instrument of co mparison allowing the consumer to gauge and 
compare the impact on his budget, in tim e and space, of commitments resulting from 
the conclusion of a credit agreement. The tota l cost of the credit must therefore include 
all costs which the consumer is required to pay for the credit, regardless of whether 
those costs are payable to the credit or, the credit intermediary or any other party. 
Accordingly, even if the consumer volunt arily takes out insurance on concluding the 
credit agreement, the costs associated with such insurance must be included in the total 
cost of the credit.  
(29) (17) In view of the specific nature of  the terms used in credit and surety  agreements, 
clarification is needed as to which terms are  should be  regarded as unfair without 
prejudice to the application to the agreement as a whole  in the framework of Council 
Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts15. That 
Directive should therefore be amended accordingly.  
(20) It is also necessary to provi de the consumer with informa tion, in the form of a total 
lending rate, on the sums payable to the creditor , excluding those payable to third 
parties. This rate allows the consumer to compare the costs specific to a creditor in 
respect of the various products he offers  and the various products available on the 
market  
(22) If the supplier of goods or services ac quired under a credit agreement can be regarded 
as a credit intermediary, the consumer must  be able to enforce rights against the 
creditor which go further than his normal c ontractual rights against a supplier of goods 
or services  
(24) It is necessary to e stablish common provisi ons on measures which apply in the event 
of non -performance of credit agreements. In particular, certain debt collection 
practices which are manifestly out of proportion must be considered illegal.  
                                                 
15 OJ L 95, 21.4.1993, p. 29. 
 
EN 18   EN (30) (25) In order to en sdure market transparency and stability, and pending further 
harmonisation, Member States need to adopt should ensure that appropriate 
measures for the registration of pe rsons offering credit or acting as regulation  or 
supervision of creditors and  credit intermediaries are in place with a view to the 
conclusion of credit agreements, for the inspection or monitoring of creditors and 
intermediaries, and for enabling consumers to lodge complaints concerning credit 
agreements or conditions . 
(26) In order to ensure permanent prot ection of the interests of  the consumer, credit or 
surety agreements should not derogate, to th e detriment of the c onsumer or guarantor, 
from the provisions implementing or  corresponding to this Directive.  
(31) (27) This Directive respects fundamental rights and observes the principles recognised 
in particular by the Charter of Fundamental Rights of the European Union. In 
particular, it aims  this Directive seeks to ensure full compliance with  respect for the 
rules on protection of personal data, the right to property, non-discrimination, 
protection of family and professional lif e, and consumer pr otection pursuant to 
Articles 8, 17, 21, 33 and 38 of the Charter of Fundamental Rights of the European 
Union.  
(32) (28) Since the objective of the action to be taken this Dire ctive , namely to establish 
common rules allowing the harmonisation of for certain aspects of the laws, 
regulations and administrative provisions of  the Member States concerning consumer 
credit, cannot be adequately  sufficiently achieved by the Member States, and can 
therefore be better achieved more effectively  at Community level, the Community can 
take action  may adopt measures in accordance with the principle of subsidiarity 
referred to  as set out in Article 5 of the Treaty. In accordance with the principle of 
proportionality, as refe rred to in the said  set out in that Article, this Directive does not 
go beyond what is necessary in order to achieve the ose objectives. 
(33) (29) The Member States must  should  lay down rules on  penalties for  applicable to  
infringements of the provisions of this Directive and must  ensure that they are 
implemented . enforced.  The ose penalties must be eff ective, proportionate and 
dissuasive constitute a deterrent .  
(34) (30) Accordingly, taking account of the num ber of amendments that need to be 
made to Directive 87/102/EEC due to the e volution of the consumer credit sector 
and in the interests of clarity of Communi ty legislation, that Directive should be  It 
is therefore necessary to  repeal ed and replac ed by this  Directive 87/102/EEC , 
HAVE ADOPTED THIS DIRECTIVE: 
 
EN 19   EN CHAPTER I 
AIM, DEFINITIONS AND SCOPE  
Article 1 
Aim Subject matter  
The aim purpose  of this Directive is to harmonise certain aspects of the laws, regulations and 
administrative procedures of the Member Stat es concerning agreements covering credit for 
granted to consumers and surety agreements  consumers.  
Article 3  2 
Scope 
1. This Directive applies shall apply  to credit agreements and surety agreements . 
2. This Directive shall not apply to the following credit agreements and, where 
applicabl e, any corresponding surety agreements : 
(a) credit agreements the aim of which is to grant credit for the purchase or 
transformation of private immovable prope rty that the consumer owns or is 
seeking to acquire and which are secured either by a mortgage on immovable 
property or by another comparable  surety commonly used in a Member 
Statefor this purpose ; 
(b) credit agreements involving a total amount of credit exceeding EUR 50 
000; 
(c) hiring agreements, except where they stipulate that the title is to pass to the 
hirer eventually ;which exclude the pa ssing of the title to the hirer or to 
persons entitled by him ; 
(d) leasing agreements which do not create any obligation to purchase the 
object of the agreement;  
(e) credit agreements under the terms of which the consumer is required to repay 
the credit by means of instalments or in a single payment within a period not 
exceeding three months, without the paymen t of interest or any other charges; 
(f) credit agreements which meet the following conditions:i) are granted by an 
employer to his employees as a seconda ry activity free  of interest or they 
are granted by the creditor as a secondary activity, i.e. outside the sphere of his 
principal commercial or professional activity,  ii)  they are granted at 
annual percentage rates of charge lowe r than those prevailing on the market, 
iii) theythey and which  are not offered to the public generally; 
 
EN 20   EN (g) credit agreements concluded with investment firms within the meaning of  as 
defined in point (2)  of Article 1(2)  of Council Directive 93/22/EEC16 for the 
purposes of allowing an investor to carry  out a transaction relating to one or 
more of the instruments listed in Section B of the Annex to that Directive, where the firm granting the credit is  involved in such transaction; 
(h) credit agreements which are the outcome of a settlement reached in court 
or before another statutory authority;  
(i) credit agreements which relate to the de ferred payment, free of charge, of 
an existing debt;  
(j) credit agreements upon the conclusion of which the consumer is requested  
to deposit an item as security in the creditor’s safe-keeping and where the 
liability of the consumer is strictly limited to that pledged item;  
(k) credit agreements which relate to loan s granted to a restricted public, at 
lower interest rates than those prevailing  on the market or free of interest, 
and where the creditor is fulfilling a st atutory duty with a general interest 
purpose.  
3. In the case of credit agreements on the basis of which credit is granted  in the 
form of an overdraft facilit y, only Articles 1 to 4, 6, 7, and 8, Article 9(1), Article 
9(2)(a) to (d), (h) and (o), Article 9( 3), Articles 10 and 11, Article 17 (1), and 
Articles 18 to 29 shall apply .  
The information to be included in thos e credit agreements shall also contain 
information on the charges applicable fr om the time such credit agreements are 
concluded, and the conditions under wh ich those charges may be amended.  
4. In the case of the following credit agreem ents, only Articles 1 to 4, 6, 7 and 8, 
Article 9 (1), Article 9(2) (a) to (g) a nd (j), Article 9(3), and Articles 10, 12 and 
17 to 29 shall apply:  
(a) credit agreements involving a total amount of credit not exceeding EUR 
300; 
(b) credit agreements concluded by non- profit associations of consumers 
which manage the savings of and provide sources of credits to their 
members, where:  
(i) the ultimate responsibility lies wi th volunteers who provide credit on 
the basis of an annual percentage rate  of charge which is subject to a 
ceiling laid down by national law; and  
(ii) membership of such associations is restricted to persons residing or 
employed in a particular  district or employees and retired employees 
of a particular employer;  
                                                 
16 OJ L 141, 11.6.1993, p. 27. 
 
EN 21   EN (c) credit agreements which provide for arrangements to be agreed by the 
creditor and the consumer in respect  of deferred payment or repayment 
methods, where the consumer is already  in default on the initial credit 
agreement] where:  
(i) such arrangements would be likely  to avert the poss ibility of legal 
proceedings concerning such default; and  
(ii) the consumer would not thereby be subject to less favourable terms 
compared to the init ial credit agreement.  
However, if the credit ag reement falls within the scope of paragraph 3, only the 
provisions provided for in that paragraph shall apply.  
Article 2  3 
Definitions 
For the purpose of this Directive , the following definitions shall apply:  
(a) “consumer” means a natural person who, in tran sactions covered by this Directive, is 
acting for purposes which can be regarded as are outside his trade, business  or 
profession; 
(b) “creditor” means a natural or legal person who grants or  promises to grant  credit in 
the course of his trade, business or profession; 
(c) “credit agreement” means an agreement whereby a creditor grants or promises to 
grant to a consumer  credit in the form of a deferred payment, loan or other similar 
financial accommodation; except for  aAgreements for the provision on a continuing 
basis of services (p rivate or public), or for the supply of g oods of the same kind  
and in the same quantity , where the consumer has the right to pays for them  for 
such services or goods for the duration of their provi sion by means of instalments, 
are not deemed to be credit agreements  for the purposes of  this directive;  
(d) “overdraft facility” means a credit ag reement whereby a creditor grants to a 
consumer the possibility to dispose of f unds in his current account which exceed 
the current balance in that account and wh ere the amount of credit has to be 
repaid within three months or on demand;  
(e) “credit intermediary” means a natural or legal person who on behalf of the creditor  
and for a fee , which may take a pecuniary form  or any other agreed form of 
financial consideration, habitually: 
(i) acts as an intermediary by presenting presents  or offering offers credit 
agreements; 
(ii) undertaking undertakes other preparatory work for credit such agreements 
other than that referred to in (i); or  
(iii) concluding  concludes  credit such agreements; the fee may take the form or 
any other agreed f orm of financial consideration;   
 
EN 22   EN (e) “surety agreement” means an ancillary agreement concluded by a guarantor and 
guaranteeing or promising to guarantee the fulfilment of a credit agreement granted 
to a consumer and covered by this directive;any form of cr edit granted to natural or 
legal persons;  
(f) “guarantor” means a consumer concluding a surety agreement;  
(f) “total cost of the credit to the  consumer” means all the costs, including borrowing  
interest, indemnities, commissions and any kind of fees .taxes a nd any other kind of 
charge  which the consumer has to pay for the credit in connection with the credit 
agreement in conformity with the terms thereof, and which are known to the 
creditor; costs relating to ancillary serv ices relating to the credit agreement, in 
particular insurance premiums, are included if the conclusion of the service 
contract is compulsory for obtaining th e credit or the advertised interest rate, 
and is concluded with the creditor or wi th a third party, if the creditor, or, 
where applicable, the credit intermediary ha ve concluded it on behalf of this 
third party or have presented the offer or the service as such to the consumer;  
costs payable by the consumer on conclusi on of the credit agreement to persons 
other than the creditor or the credit interm ediary, in particular a notary or tax 
authorities,  are excluded ; 
(g) “annual percentage rate of charge” means the total cost of  the credit to the consumer 
expressed as an annual percentage of  the total amount of credit granted ; 
(i) “sums levied by the creditor” means all the manda tory costs associated with the 
credit agreement and paid to the creditor by the consumer;  
(j) “total lending rate” means the sums levied  by the creditor expressed as an annual 
percentage of the total amount of credit;  
(h) “borrowing rate” means the in terest rate expressed as a fixed or variable  periodic 
percentage applied for a given period to the amount of credit drawn dowm 
drawdowns under the credit agreement ; 
(h) “residual value” means the purchase price of the finance d goods applicable at the 
time when the purchase option or the pr operty transfer option is exercised;  
(i) “drawdown” means an amount of credit made available to the consumer in the form 
of a deferred payment, loan or other similar financial accommodation  under a credit 
agreement;  
(j) “total amount of credit” means the cei ling or the sum of all drawdowns that are likely 
to be agreed; 
(k) “durable medium” means any instrument which enables the consumer to store 
information addressed personally to hi m in a way which makes it accessible for 
future reference for a period of time adequa te for the purposes of the information and 
which allows the unchanged reprodu ction of the information stored; 
 
EN 23   EN (p) “third party providing constitution  of capital” means any natural o r legal person, 
other than the creditor or consumer, who gives the consumer or, where applicable, 
the creditor an undertak ing, through an agreement appended to the credit agreement, 
to constitute the capita l to be repaid under such credit agreement.  
(l) “ linked credit agreement” mean s a credit agreement where  
(i) the credit in question serves exclusively to finance an agreement 
concerning the supply of goods or the provision of a service and  
(ii) those two agreements form from an objective point of view a commercial 
unit; a commercial unit is involved where the supplier or service provider 
himself finances the credit for the cons umer or, if it is financed by a third 
party, if the  creditor uses the services of th e supplier or service provider in 
connection with the conclusion, or prep aration, of the credit agreement, or 
if the credit agreement make s reference to the specifi c goods or services to 
be financed with the credit.  
 
EN 24   EN CHAPTER II 
INFORMATION AND PRACTICES PRELIMINARY TO THE FORMATION CONCLUSION  
OF THE CREDIT  AGREEMENT  
Article 4  
Advertising  
Without prejudice to Council Dire ctive 84/450/EEC, any advertisin g or any offer displayed at 
business premises that includes information on cred it agreements, in particular as regards the 
borrowing rate, total lending rat e and annual percentage rate of charge, shall be provided in a 
clear and comprehensible manner, with due regard, in particular, to the principles of good 
faith in commercial transactions. The commercial  purpose of this information must be made 
clear  
Article 4  
Standard information for advertising  
1. Any advertising concerning credit agreemen ts indicating an interest rate or any 
figures relating to the cost of the credit  to the consumer shall include standard 
information in accordance with this Article (‘the standard information’).   
2 The standard information shall include, in the following order, and in a clear, 
concise and prominent way through a representative example:  
(a) the total amount of credit;  
(b) the annual percentage rate of charge;  
(c) the duration of the credit agreement;  
(d) the amount, number and frequenc y of payments to be made; and  
(e) any kind of fees in connection with the credit agreement in conformity 
with the terms thereof and whic h are known to the creditor.  
3. Where credit terms are not available to the general public, the annual 
percentage rate of charge shall be stated  by means of at least two representative 
examples.  
4. Where a lower interest rate is offered fo r a limited duration at the beginning of 
the credit agreement, the advertisement shall contain the annual percentage 
rate of charge calculated on the to tal duration of the credit agreement.  
5. Where the conclusion of a contract regarding an ancillary service relating to the 
credit agreement, in particular an insura nce, is compulsory for obtaining the 
credit or the advertised interest rate, and its cost cannot be determined in 
advance, the obligation to take out this service shall also be mentioned in a 
clear, concise and prominent way, toge ther with the annual percentage rate of 
charge.  
 
EN 25   EN 6. This Article shall be without prejudi ce to Directive 2005/29/EC of 11 May 2005  
Article 5  
Ban on negotiation of credit and surety agreements outside business premises  
The negotiation of a credit or a surety agreement outside business premises in the 
circumstances referred to in Article 1 of Council Directive 85/577/EEC shall be prohibited.  
Article 6  5  
Exchange of information in advance and duty to provide advice Pre-contractual information  
1. Without prejudice to the application of Directive 95/46 /EC, and in particular 
Article  6 thereof, the creditor and, where ap plicable, the credit intermediary may 
request of a consumer seeking a credit agreement, and any guarantor, only such 
information as is adequate, relevant  and not excessive, with a view to assessing their 
financial situation and their ability to re pay.The consumer and guarantor shall reply 
accurately and in full to any such request for information The creditor and, where 
applicable, the credit intermediary shall adhere to the principle of responsible 
lending. Therefore, the creditor and, wh ere applicable, the credit intermediary, 
shall comply with their obligations con cerning the provision of pre-contractual 
information and the requirement for the creditor to assess the consumer’s 
creditworthiness on the basis of accurate  information provided by the latter, 
and, where appropriate, on the basis of a consultation of the relevant database.  
Where the credit agreement a llows the creditor to change the total amount of 
credit after the date of conclusion of  the credit agreement, the creditor shall 
update the financial information at hi s disposal concerning the consumer and 
shall assess the consumer’s creditworthiness before any significant increase in 
the total amount of credit.  
2. In good time before the consumer is bound by any credit agreement or offer , 
Tthe creditor and, where applicable, th e credit intermediary shall provide the 
consumer  , on paper or on another durable medium, with the necessary and 
essential information needed  for the conclusion of the credit agreement under 
consideration. .the consumer with all the exact and complete information needed in 
respect of the credit agreement under consideration. The consumer shall receive this 
information on paper or on another durable medium before th e conclusion of the 
credit agreement.  
Without prejudice to Article 5 of Directive .../.../EC [on the distance marketing of 
financial services to consumers a nd amending Council Directives 90/619/EEC, 
97/7/EC and 98/27/EC], the That  information provided mus t shall include a clear  
concise and concise clear description of the product its advantages, and any 
drawbacks . In particular tThe information must shall  refer to: 
(a) the duration of the credit agreement; 
 
EN 26   EN (b) the total amount of credit and the conditions governing the drawdown of the 
credit ; 
(c) where applicable, the borrowing rate, the conditions governing the application 
of th eis borrowing rate and , where available, any index or reference rate 
applicable to the in itial borrowing rate, as well as  the periods, conditions and 
procedure for varying the borrowing rate; 
(d) the annual percentage rate of charge and the to tal lending rate and the total 
cost of the credit to the consumer,  by means of a representative example 
mentioning all the financial data and assumptions used for calculating the is 
said rates ;  
(e) the amount, number and frequency of payments to be made, where possible 
set out in a payment schedule;  
(f) the recurrent and non -recurrent charges, in cluding additional non -recurring 
costs which the con sumer has to pay on concluding a credit agreement, such as 
taxes, administrative costs, legal fees and assessment costs with regard to the 
sureties required where applicable, the costs of maintaining an account 
recording both payment transactions a nd drawdowns, the costs of using a 
means of payment for both payment transactions and drawdowns, and 
other costs relating to payment transactions;  
(f) where applicable, the cash price of the financed goods or services, the down 
payment  due and the residual value;  
(g) costs payable by the consumer on conc lusion of the credit agreement to 
persons other than the creditor or the credit intermediary, in particular a 
notary or tax authorities;  
(h) the obligation to take out an anc illary service relating to the credit 
agreement, in particular an insurance,  where the conclusion of a contract 
regarding this service is compulso ry for obtaining the credit or the 
advertised interest rate, and its cost  cannot be determined in advance,  
(i) the interest in the case of overdue paym ents as applicable at the time when 
the information according to this provi sion is given and the arrangements 
for their adjustment, and the charges for defaulting;  
(j) the sureties and insurance  required;  
(k) the existence or absence of a right of withdrawal , the period during which 
thate right of withdrawal may be exercised; 
(l) the right of early repayment, and, where applicable, the costs arising 
therefrom, indicating the amount or the calculation method ; 
(m) the right to be informed of the result  of a database consultation for the 
assessment of the creditworthiness in accordance with Article 8(2);  
 
EN 27   EN However , in the cases  of voice telephony communications, as  referred to in 
Article 3(3) of Directive 2002/65/EC, th eis pre-contractual  information must shall  
include at least the items referred to in points  (b),  (c), and (e), and g)  of this 
paragraph and the annual percentage rate of ch arge by means of  a representative 
example and the total cost of  the credit to the consumer.  
The obligation to provide pre-contract ual information to the consumer in 
accordance with this paragraph may also be discharged by supplying a copy of 
the draft credit agreement including the information in accordance with Article 
9. 
3. The requirements provided for in paragraph 2 shall be fulfilled immediately 
after the conclusion of the credit ag reement, if that agreement has been 
concluded at the consumer’s request us ing a means of distance communication 
which does not enable providing the in formation in accordance with paragraph 
2. 
4. In the case of a credit agreement where payments made by the consumer do not 
give rise to an immediate corresponding  amortisation of the total amount of 
credit, but are used to constitute capi tal during periods and under conditions 
laid down in the credit agreement or  in an ancillary agreement, the pre-
contractual information required under pa ragraph 2 shall include a clear and 
concise statement that such credit agreemen ts do not provide for a guarantee of 
repayment of the total amount of credit drawn down under the credit 
agreement, unless such a guarantee is given.  
5. Member States shall ensure that cred itors and, where applicable, credit 
intermediaries provide adequate explanat ions to the consumer,  in order to put 
the consumer in a position to assess wh ether the proposed credit agreement is 
adapted to his needs and to his financial situation, where appropriate by 
explaining the pre-contractual informat ion to be provided in accordance with 
paragraph 2 as well as the advantages and the disadvantages associated with the 
products proposed. Member States may adapt the manner by and extent to 
which this assistance is given, as well as by whom it is given, to the particular 
circumstances of the situation in wh ich the credit agreement is offered.  
The creditor or, whe re applicable, the credit interm ediary shall seek to establish, 
among the credit agreements they usually o ffer or arrange, the most appropriate type 
and total amount of credit taking into account the financial situation of the consumer, 
the advantages and disadvantages associated with  the product proposed, and the 
purpose of the credit.  
4. Paragraphs 1, 2 and 3 do not apply to suppl iers of goods or services acting as credit 
intermediaries in an  ancillary capacity.  
 
EN 28   EN Article 6  
Pre-contractual information requirements for cr edit agreements in the fo rm of an overdraft 
facility and for certain specific credit agreements  
1. In good time before a consumer is bound by a credit agreement or any offer 
concerning a credit agreement wi thin the meaning of Article 2(3) or Article 2(4), 
the creditor and, where applicable, the credit intermediary shall provide, on 
paper or on another durable medium, the following information : 
(a) the total amount of credit;  
(b) the borrowing rate;  
(c) the annual percentage rate of ch arge by means of a representative 
example mentioning all the financia l data and assumptions used for 
calculating that rate;  
(d) the charges applicable from the ti me the credit agreemen t is concluded, 
and the conditions under which thos e charges may be amended; and  
(e) the conditions and procedure for terminating the credit agreement.  
In the case of credit agreements with in the meaning of Article 2(3), the 
information provided to the consumer in  accordance with point (e) of this 
paragraph shall include, where applicable, an indication that the consumer may 
be requested to repay the amount of cred it in full on demand at any time.  
2. In the case of credit agreements with in the meaning of Article 2(4), the 
information provided to the consumer in accordance with paragraph 1 of this 
Article shall also include:  
(a) the duration of the credit agreement; and  
(b) the amount, number and freque ncy of payments to be made.  
However, if the credit agreem ent falls within the scope of Article 2(3), only the 
provisions referred to in Article 2(3) shall apply .  
3. The pre-contractual information to be provided to the consumer in accordance 
with this Article may also be discharged  by supplying a copy of the draft credit 
agreement including the information in acco rdance with Article 9 insofar as this 
Article applies.  
4. The requirements provided for in this Arti cle shall be fulfilled immediately after 
the conclusion of the credit agreement, if  that agreement has been concluded at 
the consumer’s request using a means of  distance communication which does 
not enable providing the information in accordance with this Article.  
Article 7 
Exemptions  
 
EN 29   EN Paragraphs 1, 2 and 3Articles 5 and 6 of this Directive  shall do not apply to suppliers of 
goods or services acting as credit inte rmediaries in an ancillary capacity.  
 
EN 30   EN CHAPTER III 
PROTECTION OF PRIVACY DATABASE ACCESS  
Article 7  
Collection and processing of data  
Personal data obtained from consumers, guarantor s or any other person in connection with the 
conclusion and management of agreements covered by this Directive, and in particular by 
Article 6 (1), may be processed only for the pu rpose of assessing the fi nancial situation of 
those persons and their ability to repay.  
Article 8 
Central d Database access  
1. Without prejudice to th e application of Direct ive 95/46/EC, Member States shall 
ensure the operation on their territory of  a central database for the purpose of 
registration of consumers and guarantors who have defaulted. This database may 
take the form of a network of databases.  Creditors must consul t the database prior to 
any commitment on the part of the consumer or guarantor, subject to the restrictions 
referred to in Article 9 . The consumer and, where appropri ate, the guarantor shall, if 
they so request, be informed of the result of any consultati on immediately and 
without charge In the case of cross-border credit , each Member State shall ensure 
access for creditors from other Member St ates to databases in that Member 
State under non-discriminatory conditions.  
2. Access to the central database in an other Member State shall be ensured under the 
same conditions as for firms and individuals in  that Member State, either directly or 
via the central database of the home Member State The consumer,  if he so requests, 
shall be informed of the result of any database consultation immediately and 
without charge.  
3. Personal data received under paragraph 1 may be processed only for the purpose of 
assessing the financial situa tion of the consumer and guar antor and their ability to 
repay. The data shall be destroyed immediately after the conc lusion of the credit or 
surety agreement or the refusal by the creditor of the application for credit or the 
proposed surety.  
4. The central database referred to in paragra ph 1 may include the registration of credit 
agreements and  surety agreements.  
 
EN 31   EN CHAPTER IV 
FORMATION OF INFORMATION AND RIGHTS CONCERNING  CREDIT AGREEMENTS  
Article 9  
Responsible lending  
Where the creditor concludes a credit agreement or surety agreement or increases the total 
amount of credit or the amount guarantee d, he is assumed to have previously assessed, by any 
means at his disposal, whether the consumer  and, where appropriate, the guarantor can 
reasonably be expected to discharge their obligations under the agreement . 
Article 10  9 
Information that must be included in credit and surety  agreements 
1. Credit agreements and surety agreements  shall be drawn up on paper or on another 
durable medium. 
All the contracting parties including the guarantor and the credit intermediary, shall 
receive a copy of the credit agreement.Th e guarantor shall r eceive a copy of the 
surety agreement.  
Credit a Agreements shall contain information regarding access to mention the 
existence or non -existence of  out-of-court dispute resolution  complaint and redress 
procedures and shall specify accessible to consumers who are party to a contract 
and, if such procedures exist , the formalities for gaining access to them to be 
followed if a creditor or credit intermed iary makes use of such procedures.  
2. The credit agreement shall include  in a clear and concise manner:  
(a) the names and addresses of th e contracting parties as well as, if applicable , the 
name and address of the cred it intermediary involved; 
(b) the duration of the credit agreement;  
(c) the total amount of credit and the conditions governing the drawdown of 
the credit;  
(d) the borrowing rate, the conditions govern ing the application of that rate 
and, where available, any index, or refer ence rate applicable  to the initial 
borrowing rate, as well as the periods, conditions and procedures for 
varying the borrowing rate;  
(e) the annual percentage rate of charge a nd the total cost of the credit to the 
consumer, calculated at the time the credit agreement is concluded; all the 
financial data and assumptions used for calculating that rate shall be 
mentioned;  
 
EN 32   EN (f) the amount, number and frequency of payments to be made, where 
possible set out in a payment schedule;  
(g) where capital amortisation of a credit agreement with a fixed duration and 
interest rate is involved, a statement of account in the form of an amortisation 
table, the payments owing, and the pe riods and conditions relating to the 
payment of these such amounts; the table shall contain a breakdown of each 
repayment to show capital amortisation, th e interest calculated on the basis of 
the borrowing rate and, where app licable, the additional costs; 
(h) if charges and interest are to be pa id without capital amortisation, a statement 
showing the periods and conditions for the payment of the borrowing interest 
and of the associated recurrent  and non-recurrent charges; 
(i) where applicable, the costs of main taining an account recording both 
payment transactions and drawdowns,  the costs of using a means of 
payment for both payment transactions and drawdowns, and other costs 
relating to payment transactions;  
(j) a statement of the costs, indicating thei r purpose and amounts, cost 
components  that  which are not included in the calculation of the annual 
percentage rate of charge but which are known to the creditor or the credit 
intermediary and  are to be paid by the cons umer,under certain circumstances , 
namely the interest in case of overdue payments  as applicable at the time of 
conclusion of the agreement and the arrangements for their adjustment 
commitment fee, penalties,  the charges or interests on arrears relating to an 
overrunning of unauthorised drawdowns in excess of the total amount of 
credit, and the charges for defaulting, pl us a list setting out  the circumstances;  
(k) the sureties and insurance required;  
(l) the existence or absence of a right of withdrawal, the period during which 
that right of withdrawal may be exercised, and the procedure to exercise 
that right ; 
(m) information concerning the rights resul ting from Article 14 as well as the 
conditions for the exercise of these rights;  
(n) the right of entitlement to early repayment, as well as the procedure to be 
applied by the consumer in or der to exercise this right , the procedure for 
early repayment, and, where applicab le, the costs arising therefrom, 
indicating the amount or  the calculation method;  
(o) the procedure to be followed to exerci se the right of termination of the 
credit agreement;  
(b) the data referred to in Arti cle 6 (2), with the annual percentage rate  of charge 
and the lending rate calculated at the time the credit agreeme nt is concluded on 
the basis of all the financial data and assumptions applicable to the agreement;  
(p) where applicable, the goods or  services being financed;  
 
EN 33   EN (g) entitlement to early repayment, as well as the procedure to be applied by the 
consumer in o rder to exercise this right;  
(h) the procedure to be followed to ex ercise the right of withdrawal.  
The table referred to in c) shall contai n a breakdown of each repayment to show 
capital amortisation, the interest calc ulated on the basis of the borrowing r ate and, 
where applicable, the additional costs.  
If, in the case referred to in c), a new drawdown is not possible without the consent 
of the creditor, the creditor's decision shall be communicated on paper or on another 
durable medium. It shall be made a vailable to the consumer and contain the amended 
data to which this paragraph refers.  
Where the exact amount of these components referred to in e) is known, it shall be 
shown. Otherwise, and as a minimum require ment, these costs must be ascertainable 
in th e credit agreement on the basis of an i ndication of the percentage linked to a 
reference rate, a calculation method or the most realistic estimate possible. In such 
cases the creditor shall make available to the consumer on paper or on another 
durable medi um a breakdown of these costs without delay or, at the latest, when they 
are to be applied.  
3. The surety agreement sha ll state the maximum amount guaranteed, as well as the 
charges for defaulting to be applied in accordance with the procedure referred to in 
paragraph 2 (e).  
3. In the case of a credit agreement where payments made by the consumer do not 
give rise to an immediate corresponding  amortisation of the total amount of 
credit, but are used to constitute capi tal during periods and under conditions 
laid down in the credit agreement or  in an ancillary agreement, the pre-
contractual information required under pa ragraph 2 shall include a clear and 
concise statement that such credit agreemen ts do not provide for a guarantee of 
repayment of the total amount of credit drawndown under the credit 
agreement, unless such a guarantee is given.  
Article 14 10 
Information on the borrowing rate 
1. The borrowing rate may be fixed or variable  
2. Where one or a number of fixed borrowi ng rates have been established, the y shall 
apply for the duration of the period specified in the credit agreement.  
3. A variable borrowing rate may not vary until  the end of agreed periods provided for 
in the credit agreement and may do so only in  line with the agreed index of reference 
rate. 
4. The consumer shall be periodically informed of any change s to the borrowing rate, 
on paper or on another durable medium.  
 
EN 34   EN This information must include the ne w annual percentage rate of charge the creditor’s new 
total lending rate and the new amortis ation table. The  calculation of the new annual 
percentage rate of charge sh all be based on Article 12 (3) . Where the change to that rate is 
significant, the consumer shal l be informed immediately following the date of such 
change.  
Article 21  11 
Credit agreement in the form of an advance on a current account or a debit account overdraft 
facility  
Where a credit agreement covers credit in the form of an a dvance on a current account or 
debit account overdraft facility , the consumer shall be regularly informed of his debit 
situation by means of a statement of account, on paper or on another durable medium, 
containing the following information: 
(a) the precise period to which the statement of account relates; (b) the amounts and dates of drawdowns; (c) where applicab
le, the outstanding  balance due  from the previous statement, and the 
date thereof; 
(d) where applicable, the new balance outstanding ; 
(d) the date and amount of charges due;  
(e) the dates and amounts of payments made by the consumer; (f) the last agreed borrowing rate; (
g) the total amount of interest due;  
(g) where applicable, the minimum amount to be paid;  (h)
 where applicable, the new balance outstanding;  
(j) the new total amount outstanding, including any interest on arrears or penalties.  
In addition, the consumer shall be notified on paper or any durable medium during the 
course of the agreement of changes in the borrowing rate or in payable costs 
immediately following the date of such change.  
Article 22  12 
Open-end credit agreements and long term agreements  
1. Either party may terminate effect standard termination of an open-end credit 
agreement by giving three months' notice drawn up on paper or on another durable 
medium in accordance with the procedures laid down in  the credit agreement and in 
accord ance with national legisl ation regarding proof.  
 
EN 35   EN 2. The creditor may terminate without prio r notice the consumers’ right to draw 
down on an open-end credit agreement. The creditor shall inform the consumer 
of such decision on paper or on another durable  medium  without delay.  
3. Fixed-term agreements of more than three years may not be renewed without 
the explicit prior approval of the consumer  
Article 11 13 
Right of withdrawal 
1. The consumer shall have a period of fourteen calendar days to withdraw his 
acceptance of from  the credit agreement without giving any reason. 
Thatis period of withdrawal shall begin:  
(a) either from the day of the conc lusion of the credit agreement, or  
(b) from the day on which the consum er receives the contractual terms and 
conditions and information in accordance with Article 9 (2), if that day is 
later than the date ref erred to in point (a). on the day a copy of the credit 
agreement concluded is transmitted to the consumer.  
2. Before the consumer exercises his right of withdrawal, he may inform the 
creditor of his intention to withdraw from the credit agreement. This 
information shall be given within a p eriod of seven calendar days after the 
beginning of the period of withdrawal according to paragraph 1.  
3. If the consumer exercises his right of wi thdrawal, as provided for in paragraph 
1 of this Article, he shall, before th e expiry of the dead line referred to in 
paragraph 1, notify this to the creditor  following the information given by the 
creditor in accordance with Article 9 (2 )(l) by means which can be proved in 
accordance with national law. The consumer shall notify the creditor of his 
withdrawal before expiry of the period re ferred to in paragraph 1 and in accordance 
with national legisla tion regarding proof.  
The deadline shall be deemed to have  been observed if this notification, if it is which 
must be on paper or on another durable medium th at is available and accessible to the 
creditor, is dispatched before the deadline expires. 
 
EN 36   EN 4. Following the exercise of the ri ght of withdrawal  in accordance with paragraph 2 , 
the creditor shall notify the consumer, on  paper or another durable medium, of 
the amount of money to be repaid including the shall oblige the consumer 
simultaneously to return to the creditor the sums of money or goo ds that he has 
received by virtue of the cr edit agreement, in so far as  provision thereof is governed 
by the credit agreement. The consumer shall pay interest due for the period during 
which credit was drawn down.  
The interest due shall be  calculated on the basis of the agreed annual 
percentage borrowing  rateof charge . No other indemnity may be claimed in 
connection with exercising the right of withdrawal. 
The consumer shall pay to the creditor th at amount of money notified to him 
under this paragraph . Any dow n-payment effected by the consumer under the 
credit agreement shall be repaid to the consumer without delay.  
5. Paragraphs 1, 2 and 3  to 4 of this Article  shall not apply to credit agreements:  
(a) concluded through services of an official, provided that the official 
confirms that the consumer is guarant eed the rights under Article 5(2) and 
9(2)credit agreements secured by a mortgage or similar surety, credit 
agreements for housing  
or  (b) credit agreements cancelled under: 
(i) Article 6 of Directiv e 2002/65/EC[on the distance marketing of financial 
services to consumers and amending Council Directives 90/619/EC, 
97/7/EC and 98/27/EC];  
(ii) Article 6 (4) of Dir ective 97/7/EC of the Europe an Parliament and of the 
Council17; 
(iii) Article 7 of Directive 94/47/EC of  the European Parliament and of the 
Council18. 
Article 14  
Linked transactions . 
1. Where the consumer has exercised a right of withdrawal concerning a contract 
for the supply of goods or services by a trader, he shall no longer be bound by a 
linked credit agreement.  
2. Where:  
(a) in order to buy goods or obtain servi ces the consumer enters into a credit 
                                                 
17 OJ L 144, 4.6.1997, p. 19. 
18 OJ L 280, 29.10.1994, p. 83. 
 
EN 37   EN agreement with a person other than the supplier of them;  
(b) the creditor and the supplier of the goods or services have a pre-existing 
agreement whereby credit is made availabl e exclusively by that creditor to 
customers of that supplier for the ac quisition of goods or services from 
that supplier;  
(c) the consumer referred to in  point (a) obtains credit  pursuant to that pre-
existing agreement;  
(d) the goods or services covered by the credit agreement are not supplied, or 
are supplied only in part, or are not in conformity with the contract to 
supply them;  
(e) the consumer has pursued his remedies against the supplier but has failed 
to obtain the satisfaction to which he is entitled,  
the consumer shall have the right to  pursue remedies against the creditor. 
Member States shall determine to what extent and under what conditions these 
remedies shall be exercisable.  
3. Paragraphs 1 and 2 are without prejudice to any national rules according to 
which a creditor shall be jointly and severally liable for any claim the consumer 
may have against the supplier where the pur chase of goods or services from the 
supplier has been financed by a credit agreement.  
Article 1 6 15 
Early repayment 
1. The consumer shall be entitled to discharge fully or partially  his obligations under a 
credit agreement at any time before the time fixed in the credit agreement . In such 
cases, he shall be entitled to an equitabl e reduction in the total cost of the credit .  
2. Any indemnity claimed by t The creditor shall be entitled to claim shall bebe  a fair 
and objective indemnity  for early repayment according to the amount or the 
calculation method  and shall be calculated on the ba sis of actuarial  principles set out 
in the credit agreement.  
However, n No indemnity shall be claimed by the creditor:  
(a) for credit agreements where the period used to fix the borrowing rate is less 
than one year; 
(b) if repayment has been made under an insurance contract intended to provide a 
conventional credit re payment guarantee. 
(c) for credit agreements.which  provide for payment of  charges and interest 
without capital amortisati on, with the exception of the credit agreements 
referred to in Article 20 . 
 
EN 38   EN Article 17  16 
Assignment of rights 
Where the creditor's rights under a credit agreement or surety agreement  or the agreement 
itself are assigned to a third party , the consumer and, where a pplicable, the guarantor, shall be 
entitled to plead against the assignee of the cr editor's rights under that agreement  any defence 
which was available to him against the original creditor, including set-off where the latter is 
permitted in the Member State concerned.  
The consumer shall be informed  where the credit agreement has been assigned to a third 
party except where the assignment  is effected for securitisa tion purposes only and where 
the original creditor, in agreemen t with the assignee, still acts  on behalf of the assignee 
as a creditor vis-à-vis the consumer.  
 
EN 39   EN Article 18  
Ban on t he use of bills of exc hange and other securities  
The creditor or assignee of the creditor's rights under a credit agreement or surety agreement 
shall not require or invite the consumer or  guarantor to guarantee payment of their 
commitments under that agree ment by means of a bill of exchange or promissory note.  
Moreover, the consumer shall not be required to  sign a cheque guaranteeing repayment, in full 
or in part, of the amount due.  
Article 25  17 
Overrunning of the total amount  of creditand tacit overdraft  
1. In the event of an authorised  temporary overrunning of the total amount of credit or a 
tacit overdraft, the creditor sh all inform the consumer without delay, in writing or on 
another durable medium, of the amount involved and the borrowing rate applicab le. 
No penalties, charges or interest  on arrears shall be included.  
1. In the event of a significant overrunning of the total amount of credit which 
exceeds a period of one month,  the creditor shall info rm the consumerwithout 
delay , on paper or on another durable medium  
(a) that he has overrun the credit total  amount  of credit;  
(b) or is in an unauthorised overdraft situation and shall inform him of the amount 
involved;  
(c) of the borrowing rate; and   
(d) of any penalties, charges or interest on arrears  charges or penalties 
applicable. 
2. Any significant overrunning of the total amount of credit or overdraft as referred 
to in this article which exceeds a period of three months shall be rectified, where 
necessary through a new cred it agreement providing for a higher total amount of 
credit. 
 
EN 40   EN CHAPTER V 
ANNUAL PERCENTAGE RATE OF CHARGE AND BORROWING RATE  
Article 12  18 
Calculation of the a Annual percentage rate of charge 
1. The annual percentage rate of charge , which equates, on an annual basis, to the 
present value of all commitments (drawdow ns, repayments and charges), future or 
existing, agreed by the creditor and the consumer borrower , shall be calculated in 
accordance with the mathematical formula set out in the Annex I . 
Examples of the method of calculation ar e given in Annex II, by way of illustration.  
2. For the purpose of calculating the annual perc entage rate of charge, the total cost of 
the credit to the consumer  shall be determined, with the exception of the charges 
payable by the consumer for non-compliance with any of his commitments laid down in the credit agreement and charges other than the purchase price which,  for 
purchases of goods or servi ces, he is obliged to pay  whether the transaction is paid in 
cash or on credit.  
The costs of maintaining an account r ecording both payment transactions and 
drawdowns
credit transactions , the costs of using a card or another  means of 
payment for both payment transactions and drawdowns, and other the costs relating 
to payment transactions in general shall be included in the total costs of credit to 
the consumer  unless they are optional and they have been clearly and separately 
shown in the credit agreement or in any other agreement concluded with the 
consumer. 
Costs relating to insurance premiums shall be included in the total cost of the credit if 
the insurance is taken out when th e credit agreement is concluded.  
3. The calculation of the annual percentage rate of charge sh all be based on the 
assumption that the credit contract will  agreement is to remain valid for the period 
agreed and the creditor and the consumer will  are to fulfil their obligations under the 
terms and by the dates agreed in the credit agreement . 
4. In the case of credit agreements contai ning clauses allowing variations in the 
borrowing  rate contained in the annual percenta ge rate of charge but unquantifiable 
at the time of calculation, the annual percentage rate of char ge shall be calculated on 
the assumption that the borrowing rate and other charges will  are to remain fixed in 
relation to the initial level and will  are to remain applicable until the end of the 
credit agreement. 
5. Where necessary, the following assumpti ons may be adopted in calculating the 
annual percentage rate of charge:  
(a) if a credit agreement gives the c onsumer freedom of drawdown, the total 
amount of credit shall be deemed to be drawndown immediately and in full;  
 
EN 41   EN (b) if there is no fixed timetable for repayment, and one cannot be deduced from 
the terms of the credit agreement and the means for repaying the credit 
granted, the duration of the credit shall be deem ed to be one year;  
(c) unless otherwise specified, where the credit agreement provides for more than 
one repayment da te, the credit is to  be made available and the repayments 
made on the earliest date pr ovided for in the agreement; 
6. Where a credit agreement is drawn up in the form of a hire agreement with an option 
to purchase and the agreement provides for a number of dates on which the purchase 
option may be exercised, the annual pe rcentage rate of charge shall be calculated for 
each of the these dates.  
Where the residual value cannot be determin ed, the goods hired shall be subject to 
linear amortisation that makes its value equa l to zero at the end of the normal hire 
period laid down in the credit agreement.  
7. Whe re a credit agreement provides for a prio r or simultaneous cons titution of savings 
and the borrowing rate is set in relation to  these savings, the annual percentage rate 
of charge shall be calculated in accordan ce with the procedure set out in Annex III.  
 
EN 42   EN CHAPTER VI 
UNFAIR TERMS  
Article 1 5 
Unfair terms  
Without prejudice to the applic ation of Directive 93/13/EEC to the agreement as a whole, 
terms in a credit agreement or surety agreement shall be regarded as unfair if their object or 
effect is to: 
(a) impose on the consumer, as a condition for a drawdown, a requirement to leave as  
surety, in full or in part, the sums borrowed or  granted, or to use them, in full or in 
part, to constitute a deposit or purchase securities or other financial instruments, 
unless th e consumer obtains the same rate for such deposit, purchase or surety as the 
agreed annual percentage rate of charge ; 
(b) oblige the consumer, when concluding a cr edit agreement, to enter into another 
contract with the creditor, credit intermediary or a th ird party designated by them, 
unless the costs thereof are included in the total cost of the credit;  
(c) vary any contractual costs, indemnities or charges other than the borrowing rate;  
(d) introduce rules on the variability of the borrowing rate that dis criminate against the 
consumer  
(e) introduce a system involving a variable borrowing rate which does not relate to the 
net initial borrowing rate pr oposed when the credit ag reement was concluded and 
which would exclude all forms of rebate, reduction or oth er advantages;  
(f) oblige the consumer to use the same creditor to refinance  the residual value and, in 
general, any final payment on a credit agreement for financing the purchase of 
movable property or a service;”  
 
EN 43   EN CHAPTER VII 
PERFORMANCE OF A CRED IT AGREE MENT  
Article 18  
Ban on the use of bills of exchange and other securities  
The creditor or assignee of the creditor's rights under a credit agreement or surety agreement 
shall not require or invite the consumer or  guarantor to guarantee payment of their 
comm itments under that agreement by means of a bill of exchange or promissory note.  
Moreover, the consumer or guarantor shall not  be required to sign a cheque guaranteeing 
repayment, in full or in part, of the amount due.  
Article 19  
Joint and several liability  
1. Member States shall ensure that the existe nce of a credit agreement shall not in any 
way affect the rights of the consumer against the supplier of goods or services 
purchased by means of such an agreement in cases where the goods or services are 
not su pplied or are otherwise not in conformity with the contract for their supply.  
2. If the supplier of  goods or services  has acted as credit intermediary, the creditor and 
the supplier shall be jointly and severa lly liable for indemnifying the consumer 
where  the goods or services the purchase of which has been financed by the credit 
agreement are not supplied, or are supplied only  in part, or are not in conformity with 
the contract for their supply  
 
EN 44   EN CHAPTER VIII  
SPECIFIC CREDIT AGREE MENTS  
Article 20  
Credit agr eement providing constitution of capital  
1. If payments made by the consumer do not give rise to an immediate corresponding 
amortisation of the total amount of credit, but are used to cons titute capital during 
periods and under conditions laid down in the credit agreement, such constitution of 
capital shall be based on an  ancillary agreement attach ed to the credit agreement.  
2. The ancillary agreement referred to in para graph 1 shall provide for an unconditional 
guarantee of repayment of the total amount of  credit drawn down. If the third party 
providing constitution of capital fails to comp ly with his obligations, the creditor 
shall assume the risk.  
3. Payments, premiums and recurrent or non -recurrent charges payable by the consumer 
under the ancillary agre ement referred to in paragraph 1, together with interest and 
charges under the credit agreement, shall c onstitute the total cost of the credit. The 
annual percentage rate of charge and the to tal lending rate shall be calculated on the 
basis of the total co mmitment subscribed to by the consumer.  
 
EN 45   EN CHAPTER VII 
PERFORMANCE OF A SURE TY AGREEMENT  
Article 23  
Performance of a surety agreement  
1. A guarantor may conclude a surety agreement guaranteeing repayment under an 
open -end credit agreement for a period of thre e years only. This surety may be 
extended only with the specifi c agreement of the guarantor at the end of that period.  
2. The creditor may take action against th e guarantor only if the consumer, having 
defaulted on repayment of the credit, has failed to c omply with a default notice 
within three months. The guara ntor must be informed as soon as a default notice has 
been sent to the consumer.  
3. The amount guaranteed may only equal the outstanding balance of the total amount 
of credit and any arrears in acco rdance with the credit agreem ent, with the exclusion 
of any other indemnities or penalties provided for by the credit agreement.  
 
EN 46   EN CHAPTER X 
NON-PERFORMANCE OF A CRE DIT AGREEMENT  
Article 24  
Default notice and enforceability  
1. Member States shall ensure tha t 
(a) creditors, their representatives and any other assignee of the creditor's rights 
under a credit agreement or surety agr eement may not take disproportionate 
measures to recover amounts due to them in the event of non -performance of 
such agreements;  
(b) the creditor may demand immediate paymen t in the event of default or invoke 
a clause providing an express resolutive  condition only thro ugh a prior default 
notice requesting the consumer or, where applicable, the guarantor to comply 
with his obligations  under the agreement within a reasonable period of time or 
to apply for rescheduling of the debt;  
(c) the creditor may not suspend the c onsumer's drawdown rights unless he 
justifies his decision and is required to inform the co nsumer without delay;  
d) in the event of non -performance of their obligations  or in the event of early 
repayment, the consumer and the guarant or are entitled, on request and without 
delay, to receive a detailed statement of account, free of charge, allowing them to 
verify the charges  and interest claimed.  
2. A default notice as referred to in paragraph 1 (b) is not necessary:  
a) in the event of manifest fraud, eviden ce of which shall be provided by the creditor 
or the assignee of the creditor's rights;  
b) where the consumer alienates the property financed before the total amount of 
credit is repaid or uses the property in a manner inconsistent with the conditions of 
the credit agreement, and where the creditor or the assignee of the creditor's rights 
has a preferential claim, right of possession or reservation of title on the property 
financed, provided that the consumer has b een informed of the existence of such 
preferential claim, right of possession or re servation of title prior to the conclusion of 
the contract.  
Article 26  
Repossess ion of goods  
In the case of credit agreements for the ac quisition of goods, Member States shall lay down 
the conditions under which goods may be repossessed. If the consumer has not given his 
specific consent at the moment the creditor proceeds for reposse ssion and if he has already 
made payments corresponding to a third of the total amount of credit, the goods financed may 
not be repossessed unless by judicial proceedings.  
 
EN 47   EN Member States shall further ensure that, where the creditor  repossess es the goods, the account 
between the parties is made up so as to ensure  that repossession does not entail any unjustified 
enrichment.  
Article 27  
Recovery  
1. Natural or legal persons who undertake, as their principal or as  a secondary activity, 
and not as part of any co urt procedure, the recovery of  debts arising from a credit 
agreement or surety agreement, or who intervene in this respect, may not, in any 
form whatsoever, either directly or indir ectly, claim any fee or indemnity from the 
consumer or guarantor for their intervention, unless such fees or indemnities are 
specifically agreed in the credit agreement or surety agreement.  
2. In the context of the recovery of debts arising from a credit agreement or surety 
agreement, the following shall be prohibited:  
a) any doc ument which, as a result of its appearance, wrongly gives the 
impression that it is from a judi cial or debt me diation authority;  
b) written communications containing incorr ect information on the consequences 
of defaulting on payment;  
c) unauthorised reposs ession of goods without judicial  proceedings or the specific 
consent referred to in Article 26;  
d) any inscription on an envelope which makes it clear that the correspondence 
concerns the recovery of a debt;  
e) collection of charges not provided for by th e credit agreement or surety 
agreement;  
f) any contact with the neighbours, relati ves or employer of the consumer or 
guarantor, especially any communication of , or request for, information on the 
solvency of the consumer or guarantor, without prejudice to actions forming 
part of statutory seizure procedures  as established by Member States;  
g) physical or psychological harassmen t of a consumer or guarantor;  
h) recovery of a lapsed debt.  
 
EN 48   EN CHAPTER VI 
REGISTRATION , STATUS AND CONTROL OF CREDITOR S AND CREDIT 
INTERMEDIARIES  
Article 28  19 
Registration Regulation  of creditors and cred it intermediaries 
1. Member States shall ensure th at creditors and credit interm ediaries apply for 
registration  
The obligation to register does not apply to credit intermediaries for whom  a creditor 
or another credit intermediary assumes re sponsibility under th e terms of his own 
registration. This assumption of  responsibility must be ma de clear in a notice on the 
premises of credit intermediaries not required to register.  
Member States shall ensure that creditors and credit intermediaries are supervised 
by a body or authority independent from  financial institutions, or regulated.  
2. Member States shall ensure that creditors and credit intermediaries are supervised by 
a body or authority ind ependent from financial institutions, or regulated.  
a) ensure that the activities of  creditors and credit intermediaries are subject to 
inspection or monitoring by an institution or official body;  
b) establish  appropriate bodies to receive complaints conce rning credit 
agreements,  surety agreements and credit and surety conditions, and to provide 
consumers and guarantors with relevant  information or advice on this subject.  
3. Member States may stipulate that registra tion as referred to in the first subparag raph 
of paragraph 1 of this article shall not be necessary where the creditor or credit 
intermediary concerned is a "credit institutio n" within the meaning of Article 1(1) of 
Directive 2000/12/EC of the European Parliament and of the Council19 and is 
author ised in accordance with the provisions of that Directive.  
Where a creditor or credit intermediary is  both registered under the provisions of the 
first subparagraph of paragra ph 1 of this article  and authorised under the provisions 
of Directive 2000/12/EC of the European Parliame nt and of the Council , and the 
latter authorisation is subsequently w ithdrawn, the competent authority which has 
registered the creditor or credit intermediary  shall be informed and shall decide 
whether the creditor or credit interm ediary  may continue to grant or arrange credit or 
whether his registrati on should be cancelled.  
                                                 
19 OJ L 126, 26.5.2000, p. 1. 
 
EN 49   EN Article 29  20 
Obligations of credit intermediaries 
Member States shall ensure that a credit intermediary: 
(a) indicates in advertising and documentati on intended for clients the extent of his 
powers, in particular whether he works excl usively with one or mo re creditors or as 
an independent broker;  
(b) communicates to all creditors contacted the to tal amount of other credit offers he has 
requested or received for  the same consumer or guara ntor during the two months 
preceding conclusion of the credit agreement;  
(b) does not receive, directly or indirectly, any fee, in wh atever form, from a consumer 
who has requested his services, unless  all the following conditions are met: 
(i) the amount of the fee is st ated in the credit agreement agreed between the 
consumer and the credit intermediary  on paper or another durable 
medium;  
(ii) the credit intermediary does not  receive a fee from the creditor; 
(iii) the credit agreement for which he  has acted is actually concluded; 
(iv) the credit intermediary communicate s the amount of the fee to the 
creditor for the purpose of calculatio n of the annual percentage rate of 
charge.  
 
EN 50   EN CHAPTER VII 
IMPLEMENTING MEASURES  
Article 30  21 
Harmonisation, mutual recognition an d imperative nature of the Directive  Total 
harmonisation and imperative nature of the Directive's provisions  
1. Insofar as this Directive contains harmonised provisions, Member States may not  
maintain or  introduce provisions other than thos e laid down in th is Directive., 
except with regard to:  
(a) registration of credit agreements and su rety agreements in accordance with 
Article  8 (4); 
(b) the provisions concerning the burden of proof referred to in Article 33.  
2. When implementing and applying Articl e 5(1), (2) and (5), Article 13, Article 
14(1) and (2), Articles 15, 17, 19 and 20, and without prejudice to necessary and 
proportionate measures which Member St ates may take on grounds of public 
policy, Member States shall not restrict the activities of creditors established in 
another Member State and operating within  their territory in accordance with 
this Directive either through freedom of  establishment or free provision of 
services.  
3. Member States shall ensure that cr edit agreements an d surety agreements  do not 
derogate, to the detriment of the consumer  or guarantor , from the provisions of 
national law implementing or co rresponding to this directive. 
4. Member States shall further ensure that the provisions they a dopt in implementation 
of this d Directive cannot be circumvented as a result of the way in which agreements 
are formulated, in particular by integrati ng drawdowns or credit agreements falling 
under the scope of this d Directive into credit agreemen ts the character or purpose of 
which would make it possible to avoid its application. 
5. Member States shall ensure that c onsumers and guarantors  may not waive the 
rights conferred on them by this Directive. 
6. Member States shall take the  necessary  measures needed to ensure that consumer s 
and the guarantor  do not lose the protection granted by this Directive by virtue of the 
choice of the law of a non -member country third country as the law applicable to 
the credit agreement, if the credit agreement has a close link with the territory of 
one or more Member States. 
 
EN 51   EN Article 31 22 
Penalties  
The Member States shall lay down the rules on penalties applicable to for infringements of 
the national provisions adopted  in application of pursuant to this Directive and shall take all 
necess ary measures necessary to ensure that they are implemented . these are enforced.  
These penalties provided for must be effective, propor tionate and constitute a 
deterrent dissuasive .They may provide for the loss of inte rest and charges by the creditor and 
continuation of the right of repayment in instal ments of the total amount of credit by the 
consumer, in particular where the creditor does not respect the provisions on responsible 
lending. Member States shall communicate these notify those  provisions to the Commission 
no later than […][2 years after the entry into force of this Directive] by the date specified in 
Article 24 at the latest and shall notifiy it without delay of any subsequent amendments  
concerning affecting them without delay.  
Article 32  23 
Out-of-court dispute resolution redress  
Member States shall ensure that adequate and effective out-of-court dispute resolution 
complaints and redress procedures for the out -of-court settlement of consumer disputes 
concerning credit agreements are put in pl ace, using existing bodies where appropriate. 
Member States shall encourage those  bodies responsible for the out -of-court settlement of 
consumer disputes to cooperate in order to also resolve cross-border disputes concerning 
credit and surety agreements. 
Article 3 3 
Burden of proof  
Member States may provide th at the burden of proof in re spect of compliance with the 
consumer information obligations imposed on the creditor and credit inte rmediary, in respect 
of the consumer’s consent to the conclusion of the contract and, where appropriate, its 
performance, and in respect of the credit intermediary’s remunerated activities may lie with 
the creditor or credit intermediary . Any term in an agreement wh ich provides that the burden 
of proof in respect of compliance by the c reditor and, where applicable, the credit 
intermediary with all or part of the obligati ons incumbent on them pursuant to this Directive 
should lie with the consumer and, where applicab le, the guarantor, shall be an unfair term 
within the meaning of Directi ve 93/13/EEC.  
 
EN 52   EN Article 3 4 
Existing agreements  
1. This Directive does not apply to credit ag reements existing on the date the national 
implementing measures enter into f orce, with the exception of  the provisions of 
Articles 1, 2, 3 and 22, 23 (1) and (2), 24  to 27, and 30 to 35. Article 9 shall apply to 
such contracts in so far as an increase in the total amount of credit or the amount 
guaranteed occurs after  the national measures implementing this Directive enter into 
force.  
2. For agreements existing on the  date the national implementing measures enter into 
force, the amortisation table referred to in Article 10 must be provided to the 
consumer free of charge as soon as eith er of the following conditions applies:  
(a) cancellation of the credit agreement or early repayment ; 
b) default on payment . 
3. Member States shall ensure that open -end credit agreements existing on the date the 
national implementing measures enter into  force have to be replaced by new 
agreements which comply with  this Directive are adapte d to the requirements of this 
Directive by means of an a ddendum to the credit agreem ent sent by th e creditor to 
the consumer, no later than [...][two years af ter from the end date of expiry of the 
transposition period].  
Article 35 24 
Transposition 
1. Member States shall adopt and publish, no late r than [...][2 years after the en try into 
force of this Directive] by [insert date][2 years after the entry into force of this 
Directive] at the latest, the laws, regulations and administrative provisions 
necessary to comply with this Directiv e. They shall immediately inform the 
Commission thereof. forthwith communicate to the Commission the text of those 
provisions and a correlation table between  those provisions and this Directive.  
They shall apply those provi sions from [insert date] [2 years after the entry into 
force of this Directive]. 
When Member States adopt the ose provisions, they shall co ntain a reference to this 
Directive or be accompanied by such a reference on the occasion of their official publication. Member States shall determin e how such reference is to be made. 
2. Member States shall communicate to the Commission the text of the main 
provisions of national law which they adopt in the field covered by this 
Directive.  
3. The Commission shall undertake every five  years, and for th e first time [five 
years after the entry into force of this Directive] a review of the thresholds in 
this Directive to assess them in the lig ht of economic trends in the Community 
 
EN 53   EN and the situation of the market concern ed. The results of the review will be 
made known to the European Parliament and the Council accompanied where 
appropriate by a proposal to modify the thresholds accordingly.  
 
EN 54   EN CHAPTER VIII 
TRANSITIONAL AND FINAL PROVISIONS  
Article 36  25 
Repeal  
Directive 87/102/EEC is repealed with effect fr om the end of the transposition period for this 
Directive]  [insert date  ].  
Article 34  26  
Transitional measures 
1. This Directive does shall not apply to credit agreements existing on the date the 
national implementing measures enter into fo rce, with the exception of the provisions 
of Articles 1, 2, 3 and 22, 23 (1) and (2), 24 to 27, and 30 to 35. open-end credit 
agreements.  
2. Member States shall ensure that open-end credit agreements existing on the date the 
national implementing measures enter into  force have to be replaced by new 
agreements which comply with this Directive  are adapted to the requirements of 
this Directive by means of an addendum to the credit agreement sent by the 
creditor to the consumer, no later than [ insert date] [two years after from  the end 
date of expiry of the transposition period]. 
Article 15  27  
Amendment to Directive 93/13/EEC 
In the Annex to Directive 93/13/EEC , the following point 3 is added:  
‘3. Terms of a consumer credit agreement,  as defined in Article 2(c) of 
Directive…/…/EC of the European Pa rliament and the Council [on the 
harmonisation of the laws, regulations and administrative provisions of the 
Member States concerning credit for consumers]∗ which have the object or 
effect of:  
(a) impose imposing  on the consumer, as a condition for a drawdown, a 
requirement to leave as surety, in full or in part, the sums amounts  borrowed or 
granted, or to use them, in full or in part, to constitute a deposit or purchase securities or other financial instru ments, unless the consumer obtains at least 
the same rate for such deposit, purch ase or surety as the agreed annual 
percentage rate of charge; 
                                                 
∗ *OJ L […], dd/mm/yyyy, p. […]. 
 
EN 55   EN (b) oblige ing the consumer, when concluding a credit agreement, to enter into 
another contract with the creditor, cr edit intermediary or a third party 
designated by them, unless the costs thereo f are included in the total cost of the 
credit to the consumer ; 
(c) oblig inge the consumer to use the same cred itor to refinancethe residual value 
and, in general,  any final payment on a credit agreement for financing the 
purchase of movable prop erty or a service; 
Article 37  28 
Entry into force and applicability  
This Directive shall enter into force on the twentieth day following that of its publication in 
the Official Journal of the European Union Communities.  
However, with respect to Articles 15 and 17, Article 21(2) shall apply from [insert 
date][from six years after the da te referred to in Article 24].  
Article 38  29 
Addressees 
This Directive is addressed to the Member States. 
Done at Brussels,  
For the European Parliament For the Council 
The President The President 
 
EN 56   EN ANNEX  
The basic equation expressing the equival ence of drawdowns on the one hand and 
repayments and charges on the other 
The basic equation, which establishes the annual pe rcentage rate of charge (APR), equates, on 
an annual basis, the total present value of dr awdowns on the one hand and the total present 
value of repayments and payments of charges on the other hand, i.e.: 
() ()l k sm
llm
kt
k X D X C−
= =−+=+∑ ∑ 1 1'
1 1  
where:  X is the APR 
- M is the number of the last drawdown 
- K is the number of a drawdown, therefore 1 ≤ k ≤ m,  
 C k is the amount of drawdown k, 
 t k is the interval, expressed in years and fr actions of a year, between the date of 
the first drawdown and the date of each subsequent drawdown, therefore t1 = 0, 
 m’ is the number of the last repayment or payment of charges,  
- l is the number of a repayment or payment of charges,  
 D l is the amount of a repayment or payment of charges, 
 s l is the interval, expressed in years and fr actions of a year, between the date of 
the first drawdown and the date of each  repayment or payment of charges. 
Remarks (a) The amounts paid by both parties at different  times shall not necessarily be equal and 
shall not necessarily be paid at equal intervals. 
(b) The starting date shall be that of the first drawdown. (c) Intervals between dates used in the calculations shall be expressed in years or in 
fractions of a year. A year is presumed to have 365 days (or 366 da ys for leap years), 
52 weeks or 12 equal months. An equal m onth is presumed to have 30.41666 days 
(i.e. 365/12) regardless of whethe r or not it is a leap year.  
(d) The result of the calculation shall be e xpressed with an accur acy of at least one 
decimal place. If the figure at the follo wing decimal place is greater than or equal 
to 
5, the figure at that particular de cimal place shall be increased by one. 
 
EN 57   EN (e) The equation can be rewritten using a single sum and the concept of flows ( Ak), 
which will be positive or ne gative, in other words either paid or received during 
periods 1 to k, expressed in years, i.e.:  
()ktn
kk X A S−
=+=∑ 1
1,
 
 S being the present balance of flows. If the aim is to maintain the equivalence of 
flows, the value will be zero. 
(f) Member States shall provide that the methods  of resolution applic able give a result 
equal  to that of the examples pr esented in Annexes II and III.  
 
EN 58   EN ANNEX II  
Examples of calculation of the annual percentage rate of charge  
Preliminary remarks  
Unless otherwise stated, all examples assume a single drawdown of cred it equal to the total 
amount of th e credit and placed at the consumer’s dis posal as soon as the credit agreement is 
concluded. In this connection, it should be noted that if the credit agreement gives the 
consumer freedom of drawdown, the total am ount of credit is deemed to be drawn down 
immediately and in full.  
Some Member States, in order to  express the borrowing rate, have  opted for an effective rate 
and the equivalent conversion me thod, thus avoiding a situation in which the calculation of 
periodical interest is carried out in countless  ways using different pr o rata temporis rules 
which have only a very vague relationship with the linear nature of time. Other Member 
States permit a nominal periodic rate using a proportional conversion method. This directive 
seeks to separate any further regulation of borrowing rates from  the regulation of effective 
rates, simply stating the rate used. The exampl es in this Annex refer to the method that has 
been used.  
Example 1  
Total amount of credit (capital) of €  6 000.00, repayable in four equal annual instalments of 
€ 1 852.00.  
The equation becomes:  
()
XX4111
. 1852 6000+−
=
 
or: 
4 2 1) 1(11852 ..........) 1(11852) 1(11852 6000X X X ++++++=
 
giving X = 9.00000%, i.e. an APR of 9.0%.  
 
EN 59   EN Example 2  
Total amount of credit (capital) €  6 000.00, repayable in 48 equal monthly instalments of 
€ 149.31.  
The equation becomes:  
()[]
1 ) 1(111
31,149 600012/14812/1
−++−
=XX
 
or: 
12/48 12/2 12/1) 1(131,149 ..........) 1(131,149) 1(131,149 6000X X X ++++++=
 
giving X = 9.3805 93%, i.e. an APR of 9.4%.  
Example 3  
Total amount of credit (capital) of €  6 000.00, repayable in 48 equal monthly instalments of 
€ 149.31. Administrative charges of €  60.00 are payable on conclusion of the contract.  
The equation becomes:  
()[]
1 ) 1(111
31,149 60 600012/14812/1
−++−
=−XX
 
or: 
12/48 12/2 12/1) 1(131,149 ..........) 1(131,149) 1(131,149 5940X X X ++++++=
 
giving X =  9.954966%, i.e. an APR of 10%.  
 
EN 60   EN Example 4  
Total amount of credit (capital) of €  6 000.00, repayable in 48 equal monthly instalments of 
€ 149.31. Administrative charges of €  60.00 are spread over the repayments. The monthly 
instalment is therefore (€  149.31  + (€  60/48)) = €  150.56.  
The equation becomes:  
()[]
1 ) 1(111
56,150 600012/14812/1
−++−
=XX
 
or: 
12/48 12/2 12/1) 1(156,150 ..........) 1(156,150) 1(156,150 6000X X X ++++++=
 
giving X = 9.856689%, i.e. an APR of 9.9%.  
Example 5  
Total amount of credit (capital) of €  6 000.00, repayable in 48 equal monthly instalments of 
€ 149.31. Administrative charges are €  60.00, and insu rance € 3.00 per month. The costs 
associated with insurance premiu ms must be included in the total cost of the credit if the 
insurance is taken out when the credit agreemen t is concluded The instalment is therefore 
€152.31.  
The equation becomes:  
()[]
1 ) 1(111
31,152 594012/14812/1
−++−
=XX
 
or: 
12/48 12/2 12/1) 1(131,152 ..........) 1(131,152) 1(131,152 5940X X X ++++++=
 
giving X = 11.1070115%, i.e. an APR of 11.1%.  
 
EN 61   EN Example 6  
Balloon -type credit agreement for a to tal amount of credit of €  6 000.00 (purchasing price of a 
car to be financed), repayable in  47 equal monthly instalments of €  115.02 plus a final 
payment of €  1 915.02 representing the residual valu e of 30% of the capital (balloon 
agreement), plus insurance of €  3.00 per month. Again, the costs associated with insurance  
premiums must be included in the total cost of the credit if the insurance is taken out when the  
credit agreement is concluded The instalment is therefore €  118.02, and the final payment will 
amount to €  1 918.02.  
The equation becomes:  
()[]
[]4812/112/14712/1
) 1(102, 1918
1 ) 1(111
02,118 6000
X XX
++
−++−
=
 
or: 
12/48 12/47 12/2 12/1) 1(1).3 02,115 1800(
) 1(102,118 ..........
) 1(102,118
) 1(102,118 6000
X X X X ++++
++
++
+=
giving X = 9.381567%, i.e. an APR of 9.4%.  
Example 7  
Credit agreement for a total am ount of credit (capital) of  € 6 000.00, with administrative 
charges of €  60.00 payable on conclusion of the contra ct, and two payment periods of 22 and 
26 months respectively. The second -period instalment corres ponds to 60% of the first -period 
instalment. The respective monthly inst alments are €  186.36 and €  111.82.  
The equation becomes:  
()[] ()[]
[] 
+







−++−
+−++−
=2212/112/12612/1
12/12212/1
) 1(1.1 ) 1(111
82,1111 ) 1(111
36,186 5940
X XX
XX
 
or:  
[] 

+

+++
++
++

+++
++
+=
2212/112/26 12/2 12/112/22 12/2 12/1
) 1(1.
) 1(182,111 ..........
) 1(182,111
) 1(182,111) 1(136,186 ..........
) 1(136,186
) 1(136,186 5940
X X X XX X X
 
giving X = 10.04089%, i.e. an APR of 10.0%.  
 
EN 62   EN Example 8  
Credit agreement for a total amount  of credit (capital) of €  6 000.00, with administrative 
charges of €  60.00 payable on conclusion of t he contract, and two pa yment periods of 22 and 
26 months respectively, the first -period instalment corresponding to 60% of the second -period 
instalment. The respective monthly instalments are €  112.15 and €  186.91.  
The equation becomes:  
()[] ()[]
[] 
+







−++−
+−++−
=2212/112/12612/1
12/12212/1
) 1(1.1 ) 1(111
91,1861 ) 1(111
15,112 5940
X XX
XX
 
or: 
[] 

+

+++
++
++

+++
++
+=
2212/112/26 12/2 12/112/22 12/2 12/1
) 1(1.
) 1(191,186 ..........
) 1(191,186
) 1(191,186) 1(115,112 ..........
) 1(115,112
) 1(115,112 5940
X X X XX X X
 
giving X = 9.888383%, i.e. an APR of 9.9%.  
Example 9  
Credit agreement for a total amount  of credit (price of goods) of €  500.00, repayable in three  
equal monthly instalments calculated by applying the borrowing rate T of 18% (nominal rate), 
plus administrative charge s of €  30.00 spread over the payments. The monthly instalment is 
therefore €  171.69 + €  10.00 charges = €  181.69.  
The equation becomes:  
()[]
1 ) 1(111
69,181 50012/1312/1
−++−
=XX
 
or: 
12/3 12/2 12/1) 1(169,181) 1(169,181) 1(169,181 500X X X +++++=
 
giving X = 68.474596%, i.e. an APR of 68.5%.  
This example typifies practices s till used by certain specialist "v endor -credit" establishments.  
 
EN 63   EN Example 10  
Credit agreement for a total amount of credit (capital) of €  1 000, repayable in two 
instalments of either €  700.00 after one year and €  500.00 after two years, or €  500.00 after 
one year and €  700.00 after two year s 
The equation becomes:  
[] []2412/11212/1) 1(1500
) 1(1700 1000
X X ++
+=
 
giving X = 13.898663%, i.e. an APR of 13,9%.  
or: 
[] []2412/11212/1) 1(1700
) 1(1500 1000
X X ++
+=
 
giving X = 12.321446%, i.e. an APR of 12.3%.  
This example shows that the annual percenta ge rate of charge depends on the payment 
periods. and that stating the total cost of the cr edit in the prior information or in the credit  
agreement is of no benefit to the consumer Despite the total cost of credit being €  200 in both 
cases, there are two different APRs (d epending on the speed of repayment).  
Example 11  
Credit agreement for a total amount of credit of €  6 000, with a borrowing rate of 9%, 
repayment in four equal annual instalments of €  1 852.01, and administrative charges of 
€ 60.00 payable on conclusion of the agreement.  
The equation becomes:  
()
XX4111
01, 1852 5940+−
=
 
or: 
4 2) 1(101, 1852 ..........) 1(101, 1852) 1(101, 1852 5940X X X ++++++=
 
giving X = 9.459052%, i.e. an APR of 9.5%.  
In the event of early repayment, th e equations become:  
 
EN 64   EN After one year:  
) 1(16540 5940X+=
 
where 6540 is the sum due, including interest, be fore payment of the first scheduled payment 
according to the amortisation table,  
giving X = 10.101010%, i.e. an APR of 10.1%.  
After two years:  
2) 1(191, 5109) 1(101, 1852 5940X X +++=
 
where 5109.91 is the sum  due, including interest, before payment of the second scheduled 
payment according to the amortisation table,  
giving X = 9.640069%, i.e. an APR of 9.6%.  
After three years:  
3 2) 1(111, 3551) 1(101, 1852) 1(101, 1852 5940X X X +++++=
 
where 3551.11 is the sum due, including interest, before payment of the third sche duled 
payment according to the amortisation table,  
giving X = 9.505315%, i.e. an APR of 9.5%  
This shows how the provisional APR decreases in the course of time, especially where 
charges are payable on conclusion of the agreement.  
 
EN 65   EN This example can also serv e to illustrate the cas e of a mortgage credit intended to refinance 
current credit agreements where the costs (notary's fees, regist ration, taxes) are due when the 
authenticated act is completed and the funds ar e made available to the consumer from the 
same date  
 
EN 66   EN Example 12  
Credit agreement for a total amount of credit of €  6 000, with a borrowing rate T of 9% 
(nominal rate), repayment in 48 monthly instalments of €  149.31 (calculated proportionally), 
and administrative charges of €  60.00 payable on conclusi on of the agreement.  
The equation becomes:  
()[]
1 ) 1(111
31,149 594012/14812/1
−++−
=XX
 
or: 
12/48 12/2 12/1) 1(131,149 ..........) 1(131,149) 1(131,149 5940X X X ++++++=
 
giving X = 9.9954957%, i.e. an APR of 10%.  
However, in the case of early repayment, this becomes:  
After one year:  
()[]
()[]1212/112/11112/1
1164, 4844
1 ) 1(111
31,149 5940
X XX
++
−++−
=
 
where 4844.64 is the sum due, including interest , before payment of the 12th scheduled 
payment according to the amortisation table,  
giving X=10.655907%, i.e. an APR of 10.7%.  
After two years:  
()[]
()[]2412/112/12312/1
1158, 34171 ) 1(111
31,149 5940
X XX
++−++−
=
 
where 3417.58 is the sum due, including interest , before payment of the 24th monthly 
instalment according to the amortisation table,  
giving X = 10.1360 89%, i.e. an APR of 10.1%.  
 
EN 67   EN After three years:  
()[]
()[]3612/112/13512/1
1166, 18561 ) 1(111
31,149 5940
X XX
++−++−
=
 
where 1856.66 is the sum due, including interest , before payment of the 36th monthly 
instalment according to the amortisation table,  
giving X = 9.991921%, i.e. an APR of 10%.  
Example 13  
Total amount of credit  (capital) of €  6 000.00, repayable in four equa l annual instalments of 
€ 1 852.00. Let us now assume that the borrowing rate (nominal rate) is variable and increases 
from 9.00% to 10.00% after the second annual instalment. This resu lts in a new annual 
instalment of €  1 877.17. Remember that, in calculating the APR, it is normally assumed that 
the borrowing rate and other costs remain fixed at  the initial level and apply until the end of 
the credit agreement. In that case (example 1), the APR will be 9%.  
In the event of any change to the rate, the ne w APR must be communicated and calculated on 
the assumption that the credit agreement will re main in force for the rest of the agreed 
duration, and that the creditor and cons umer will fulfil their obligations und er the terms and 
by the dates agreed.  
The equation becomes:() ()




+−
++−
=22 21.111
17, 1877111
01, 1852 5940X XX
XX
or 
+



+++++++=2 4 3 21
) 1(117, 1877) 1(117, 1877) 1(101, 1852) 1(101, 1852 5940X X X X X 
giving X = 9.741569, i.e. an APR of 9.7%.  
Example 14  
Total amount of credit (capital) of €  6 000.00, repayable in 48 equal monthly instalments of 
€ 149.31, with administrative charges of €  60.00 payable on conclusion of the agreement, plus 
insurance of €  3.00 per month. The costs associated with insurance pr emiums must be 
included in the total cost of the credit if the insurance is taken out when the credit agreement 
is concluded. The instalment is therefore €  152.31 and the calculation, as in example 5, gives 
X = 11.107112, i.e. an APR of 11.11%.  
 
EN 68   EN Let us now assume that the borrowing rate (nominal) is variable and increases to 10% after 
the 17th payment. This change requires a new AP R to be communicated and calculated on the 
assumption that the credit agreement will remain  in force for the rest of the agreed d uration, 
and that the creditor and cons umer will fulfil their obligat ions under the terms and on the 
dates agreed. The equation becomes:  
()[]
()()[]
() ()[]




+−++−
+
−++−
=1712/112/13112/1
12/11712/1
11.
1 1111
22,154
1 1111
91,151 5940
X XX
XX
or: 
[] 

+

+++
++
++

+++
++
+=
1712/112/31 12/2 12/112/17 12/2 12/1
) 1(1.
) 1(122,154 ..........
) 1(122,154
) 1(122,154) 1(191,151 ..........
) 1(191,151
) 1(191,151 5940
X X X XX X X
 
or: 
 
giving X = 11.542740%, i.e. an APR of 11,5%.  
Exampl e 15 
Credit agreement of the "leasing" ty pe for a car with a value of €  15 000.00. The agreement 
stipulates 48 monthl y instalments of €  350. The first monthly instalment is payable as soon as 
the car is placed at the consumer’s disposal. At the end of the 48 months the purchase option 
may be taken up by paying the residual value of €  1 250. 
The equation becomes:  
()[]
()[]4812/112/14712/1
111250
1 ) 1(111
350 14650
X XX
++
−++−
=
 
or: 12 / 31 12/2 12 / 1 ) 1(106,153 ..........) 1(106,153 ) 1( 106 , 153 
X X X +++++ += 4107.06 ( ) [ ] 
1 ) 1 (1 1 1
06 , 153. 12 / 1 3112 / 1 
− + + − 
= 
X X 
4107,06 
 
EN 69   EN 12/48 12/47 12/2 12/1) 1(11250) 1(1350 ..........) 1(1350) 1(1350 14650X X X X ++++++++=
 
 
EN 70   EN giving X = 9.541856%, i.e. an APR of 9.5%.  
Example 1611  
Credit agreement of the “financing”, “ve ndor credit” or “hire purchase” type for go ods with a 
value of €  2 500. The credit agreement provides for a down -payment of €  500 plus 24 
monthly instalments of €  100, the first of which must be pa id within 20 days of the goods 
being placed at the consumer’s disposal.  
In such cases the down -payment  is never part of the financing operation.  
The equation becomes:  
()[]()[]
1 ) 1(111
100
11).500 2500(12/12412/1
20
12365
365/1 −++−
=
+−

− XX
X 
or: 
()12/24 12/2 12/1
3654316,10) 1(1100 ..........) 1(1100) 1(1100
11. 2000X X XX++++++=
+ 
giving X = 20.395287, or an APR of 20.4%.  
 
EN 71   EN Example 17  
Credit agreement for a credit line of €  2 500 for a period of six months. The credit agreement 
provides for payment of the total c ost of the credit every month and repayment of the total 
amount of the credit at the end of the agreemen t. The annual borrowing rate (effective rate) is 
8 %, and the charges amount to 0.25 % per mont h. The assumption that the amount of credit 
is drawn down  immediately and in full applies here.  
The monthly borrowing interest payment is calcu lated on the basis of an  equivalent monthly 
rate, using the equation:  
()[]} { 25,01 08,1. 250012/1+− =a 
or: 
34,22) 0025,0 006434,0.( 2500 =+ =a 
This becomes:  
()[]
()12/6 12/1612/1
1125001 ) 1(111
34,22 2500
X XX
++−++−
=
 
or: 
12/6 12/6 12/2 12/1) 1(12500
) 1(134,22 ..........
) 1(134,22
) 1(134,22 2500
X X X X ++
+++
++
+=
 
giving X = 11.263633 i.e. an APR of 11.3%.  
Example 13  
Credit agreemen t for an open -end credit line of €  2 500. The agreement provides for a 
minimum half -yearly payment of 25% of the outstanding balance (capital and interest), with a 
minimum of €  25. The annual borrowing rate (effective rate) is 12%, and the administrative 
charge payable on conclusion of the agreement is €  50. 
(The equivalent monthly rate  is obtained by the equation:  
00583,01 )12,01(12/6=− +=i 
or 5.83%).  
The 19 half -yearly repayments (Dl) can be obtained from an amortisation table, giving D1 = 
661.44; D2 = 525; D3 = 416.71; D4 = 330. 75; D5 = 262.52; D6 = 208,37  ; D7 = 165.39; D8 = 
208.37; D9 = 104.20; D10 = 82.70; D11 = 65.64;  D12 = 52.1; D13 = 41.36; D14 = 32.82; 
D15 = 25; D16 = 25; D17 = 25; D18 = 25; D19 = 15.28.  
 
EN 72   EN The equation becomes:  
12/114 12/108 12/12 12/6) 1(128,15) 1(125 ..........) 1(1525) 1(144,661 50 2500X X X X ++++++++=−
Giving X = 13.151744%, i.e. an APR of 13.2%.  
Example 19  
Credit agreement for an open -end credit line involving the use of a card for drawdowns. Total 
amount of the credit: €  700. The agreement provides for a minimum monthly payment of 5% 
of the outstanding ba lance (capital and interest ), and the scheduled insta lment (a) may not be 
less than €  25. The annual cost of the card is €  20. The annual borrowing rate (effective rate) 
is 0% for the first instalment and 12% for the subsequent instalments.  
The 31 monthly repayment amounts (Dl) can be obtained from an amorti sation table, giving 
D1 = 55.00; D2 = 33.57; D3 = 32.19; D4 = 30.87; D5 = 29.61; D6 = 28.39; D7 = 27.23; D8 = 
26.11; D9 = 25.04; D10 à D12 = 25 .00; D13 = 45; D14 à D24 = 25,00  ; D25 = 45  ; D26 à 
D30 = 25.00; D31 = 2.25.  
The equation becomes:  
12/31 12/30 12/2 12/1) 1(125,2) 1(125 ..........) 1(157,33) 1(155 700X X X X ++++++++=
 
giving X = 1 8.470574, i.e. an APR of 18.5%  
Example 20  
Open -end credit line in the form of an overdra ftadvance on a current account. Total amount of 
credit: €  2 500. The credit agreement does not impose any requirements in terms of repayment 
of capital, but provides for monthly payment of the total cost of the  credit. The annual 
borrowing rate is 8% (effective rate ). The monthly charges amount to €  2.50.  
It is assumed that the full am ount of credit will be drawn dow n, with repaym ent in theory 
after one year.  
 
EN 73   EN First of all, the theoretical scheduled payment of in terest and charges (a) is calculated  
()[] { 50,21 08,1. 250012/1+− =a, 
then:  
()[]
()1212/112/11212/1
112500
1 ) 1(111
59,18 2500
X XX
++
−++−
=
 
i.e.: 
12/12 12/12 12/2 12/1) 1(12500
) 1(159,18 ..........
) 1(159,18
) 1(159,18 2500
X X X X ++
+++
++
+=
 
giving X = 9.295804, i.e. an APR of 9.3%  
 
EN 74   EN ANNEX III – Calculation of the annual percentage  rate of charge for a contract 
requiring advance or accompanying savings and for which the borrowing rate is s et to 
reflect the level of savings  
Symbols used:  
– C = Capital  
– N = duration in years  
– T = annual borrowing rate  
– A = annuity  
– F = periodicity  
– n = duration in periods  
– t = periodic borrowing rate  
– a = periodic repayment.  
– M = saving period  
1. MIXED CREDIT AGREEMEN T WITH (COMPULSORY ) SAVINGS IN ADVANCE  
First example  
The granting of a credit C totalling €  6000 over N = two years is subject to the saving in 
advance over M = two years of half of  the said amount, i.e. €  3000 in all, of which the final 
amount saved is €  125 and is deposited one month prior to the drawdown of the credit. The 
savings in question attract no interest but th e borrowing rate for the credit agreement will 
amount to no more than T = 6% at a time when market cond itions are setting a rate of 9% 
insteadThe amount saved each month is e = € 125.00, the monthly repayment a = € 140.91, 
the APR, excluding savings, is 6.17% or 6.2%.  
To find the annual percentage rate  applicable to the transaction as a whol e the formula is as 
follows  
()[]()[]()[]




−++−
+




+−++−
=+1 ) 1(111
91,140 1.1 ) 1(111
125 3000 600012/14812/12512/1
12/12412/1
XXXXX
,
 
or: 
 
EN 75   EN ()[]}


++++++++



++++++=+
12/48 12/2 12/12512/1
12/24 12/2 12/1
) 1(191,140 ..........) 1(191,140) 1(191,1401.) 1(1125 ..........) 1(1125) 1(1125 3000 6000
X X XXX X X
To 
solve the equation using a recursive method, let X1 = 0.062, and the value of the first member 
calculated as 170.5,  
then X2 = 0.063 and the value of the first member is calculated as 163.3  
and so forth  
then X26 = 0.087 and the value of the first member is calculated at 6.0  
then X27 = 0.088 and the value of the first member is calculated at 0.1  
then X28 = 0.089 and the value of the firs t member is calculated at -5.7. 
The correct solution is X = 8.802245%, or 8.8% and this is the APR to be given to the 
consumer as the APR for the credit agreement involving an amount to be saved in advance.  
Second example  
The granting of a credit C totalling €  6000 over N = two years is subject to the saving in 
advance over M = two years of half of  the said amount, i.e. €  3000 in all, of which the final 
amount saved is €  125 and is deposited one month prior to  the drawdown of the credit. These 
savings attract a lending rate of S = 3% and the borrowing rate is only T = 6% at a time when 
market conditions set rates at 9%.  
The amount saved each month is e = € 125.00, the monthly repayment a = € 140.91, the APR, 
excluding savings is 6.17% or 6.2%.  
The updated future value of M will be M’ calculated according to the following formula:  
iiMn1)1(.125'−+=
, where  
1 ) 1(12/1−+= S i 
and n = 24 months  
or: 
65, 30861 )03.1(1 )03,1(.125)('12/112/24
1 =−−=−tM
and 
26, 3094 )03,1.(65, 3086)('12/1
0 = =tM 
 
EN 76   EN where t 0 = time of credit drawdown . 
 
EN 77   EN To find the APR for the transaction as a whole:  
()[]()[]()[]




−++−
+




+
−++−
=+
1 ) 1(111
91,140 1.
1 ) 1(111
125 6000 26, 309412/14812/12512/1
12/12412/1
XXX
XX
or: 
()[]}


++++++++



++++++=+
12/48 12/2 12/12512/1
12/24 12/2 12/1
) 1(191,140 ..........) 1(191,140) 1(191,1401.) 1(1125 ..........) 1(1125) 1(1125 6000 26, 3094
X X XXX X X
To solve the equation a recursive method can agai n be used with X = 7.484710, or an APR of 
7.5%.  
2. Mixed agreement with accompanying savings  
2.1. Mixed credit agreement with  optional savings (advance s to current 
account)  
 See Annex II, example 20. Savings do not form part of the APR 
calculation2.2. Credit agreemen t with mixed life assurance  
 These are endowment -type mortgages such as those referred to in Article 20 of 
this directive, where saving form s part of the agreement.  
 Let the total amount of credit be €  6000 to be repaid in four annuities at a 
borrowing rate of 9% but structured as repayments in fine . Suppose that the 
manager of the fund has paid at the e nd of each of the three first years an 
amount of €  1200.00 and that this amount saved has attracted 4%. The balance 
of this account, before the final repayment is due, will be €  3895.76. It will 
then be necessary for him to add an additional €  2104.24. His timetable will be 
for three annuities a t € 1740.00 and one at €  2644.24 for a capital of €  6000.  
 The formula:  
()
()43
1(1.24, 2644111
. 1740 6000
X XX
+++−
=
 
 or: 
() () () ()4 3 2 111.24, 2644
11. 1740
11. 1740
11. 1740 6000
X X X X ++
++
++
+=
 
 and X = 10.955466, or an APR of 10.96%