Obligations of the borrowers
Consumers who take out a loan enter into a binding contract called a loan agreement. This contract will inevitably result in rights and obligations that must be met by the borrower.
So that you know what you are getting involved in, we have prepared the topic comprehensibly for you.
What is regulated in the loan agreement
The loan agreement sets out the conditions under which the bank, as lender, is willing to grant a loan of a certain size. For this purpose, the contract provides statements on the type of loan, the amount of the loan, the term of the loan and the interest payable and the collateral to be provided. An effective credit agreement can only be concluded by creditworthy (legal persons). All provisions are regulated for private consumers in the Civil Code.
The loan agreement must be in writing. If a contract is concluded electronically or by telephone, it is void due to a lack of form. The borrower must be provided by the bank with a copy or copy of the contract.
It is true that the borrower primarily assumes obligations under the loan agreement because of the repayment obligation, which is the first of the obligations. But he also has rights. This is, for example, the right to disbursement of the loan amount if the conditions for payment have been met by it. In addition, borrowers have the right to receive collateral they have provided in connection with the granting of the loan, such as the vehicle registration document in the event of auto financing following repayment of the loan.
Obligations of borrowers
First and foremost, it is the duty of the borrower to repay the loan amount and interest on the agreed payment date. In addition, borrowers undertake to the Bank to disclose their financial circumstances upon request, during the term of the loan. Additional obligations of a borrower, which are not directly named in the loan agreement, are in the GTC, which are each part of the contract. Therefore, it is important that borrowers read and internalize the terms and conditions.
Significant changes in the economic conditions that could result in the repayment of the loan being jeopardized must be reported to the bank in good time. Many banks are willing to seek solutions together with borrowers in the event of possible difficulties without immediately terminating the loan. Here the customers are in demand.
Rights of borrowers – the right of withdrawal
The new Consumer Credit Directive has also better regulated the right of withdrawal.
Borrowers have a right of withdrawal for all loan agreements, which they can claim within 14 days. If a borrower withdraws from the loan agreement, he does not have to give any reasons. Some banks are already granting their customers a long-term right of withdrawal.
Moral obligations of borrowers
As a borrower, there are legal obligations and obligations arising from a closed credit agreement that must be adhered to. But there are also moral aspects to mention.
For example, it is morally reprehensible to try to betray the bank by failing to specify existing obligations or by providing false data to the bank from the outset in order to obtain credit. The information provided in the credit application must be true. Morally it is also reprehensible when consumers sneak up a loan, although they have no intention to repay this loan.