What an express loan is and which forms exist
The term express loan (Expresskredit) is not a legally protected designation. It refers to loans that are applied for online and paid out or activated particularly quickly. In practice three products are involved: the short-term loan with a term of a few weeks, the credit card with an instalment function, and the classic personal loan (Ratenkredit) with fixed instalments. All of them are subject to the rules on consumer loans in sections 491 ff. of the German Civil Code (BGB), for example on contract content, withdrawal and pre-contractual information.
The difference lies in repayment. With a short-term loan you repay the amount plus interest at the end of the term or in two instalments. With a credit card you use a limit, pay a minimum instalment each month and can repay more at any time. With a personal loan, term and instalment are fixed from the start. Which form is cheaper depends on how long you really need the money.
Interest, minimum instalment and worked examples
The borrowing rate (Sollzins) states the pure interest on the loan per year. The effective annual rate additionally includes certain costs of the loan and must be stated in advertising under the German Price Indication Ordinance (PAngV). Only the effective annual rate makes offers comparable, which also applies when the loan runs for just a few weeks. Optional extras, such as faster processing for a surcharge, are according to the providers often not included in the effective annual rate.
Two worked examples using the figures on this page: for the short-term loan at a 12.71% borrowing rate, €500 over 60 days costs roughly €10.45 in interest under the formula amount × borrowing rate × days ÷ 365, i.e. €510.45 in total. For the credit card at a 22% borrowing rate and a €1,500 balance, about €27.50 of interest accrues in the first month. If the minimum instalment is 2% of the balance, i.e. €30, only about €2.50 of that repays the debt. The debt then falls so slowly that the term can stretch over many years.
Where possible, therefore, pay a fixed amount well above the minimum instalment, or set up a standing order to clear the balance in full. Also check whether extra repayments are free of charge. For personal loans, consumer credit law gives you the right to repay the loan early, in whole or in part, at any time.
How the creditworthiness check works
Before concluding the contract, lenders must assess whether you are likely to be able to repay the loan (section 505a BGB). They ask about income, expenses and existing obligations and usually obtain a report from a credit reference agency such as Schufa. Some providers use other agencies or their own models. Approval without any check would not be compatible with the statutory duties, so treat advertising such as loans without a credit check with scepticism.
An enquiry about terms does not normally affect your credit rating, whereas a specific loan application may be recorded. So do not submit binding applications to many providers at the same time. If an application is rejected, you have the right to learn which report the rejection is based on. From Schufa you can request a free copy of your data once a year under Article 15 GDPR.
Alternatives and warning signs
Before you take out an express loan, it is worth looking at cheaper routes. A personal loan from a bank usually has a much lower rate if your credit rating is good, but takes a little longer. An overdraft is available at once but also carries high interest. For a one-off bill you can agree instalments or a deferral with the creditor, which often costs nothing. If the repayments are already hard to manage, free debt counselling helps, available through local authorities, welfare organisations and consumer advice centres.
Warning signs of dubious offers are advance fees, a supposed loan despite a negative credit rating, and pressure to decide quickly. Under section 655c BGB, loan brokers may only demand a fee if the loan is actually concluded. If you are asked to pay up front for processing or insurance, do not continue. Also check whether the provider is listed in a register of the financial supervisor. BaFin maintains a company database for this, and providers from other EU countries are supervised in the country where they are based.
Step by step to the right loan
Start with an honest calculation of your needs: how much money do you really need, and when can you repay it? An amount that is too high causes unnecessary interest, a term that is too short creates pressure at repayment. Weigh the monthly burden against your income and fixed costs, and plan a buffer for the unexpected.
Then compare at least three offers on the basis of the effective annual rate, the total cost and the contract terms. Read the European Standard Information (ESIS) sheet, which lenders must give you before the contract is concluded. It summarises interest, term, instalments and total amount in a uniform format. Check whether the borrowing rate is fixed or variable, because with a variable rate the burden can rise during the term.
After the contract is concluded, the 14-day right of withdrawal applies to consumer loans of €200 or more. Use the time to check all documents once more. Note the repayment dates in your calendar and switch on notifications in the provider's app. Anyone who pays on time and repays early protects their credit rating and saves interest.