Consumer Credit Directive: Rethinking Automotive Finance?

The comprehensive consumer protection regime applicable to consumer financial accommodation will also be extended to leasing agreements under which the consumer has a right to acquire ownership of the vehicle. As a result, leasing products that were previously outside the scope of the rules, such as mileage-based leasing arrangements, may fall under the rules for credit agreements in the form of chargeable financial accommodation and therefore become subject to the provisions governing consumer credit agreements.

The requirements applicable to the advertising of credit products will become more stringent. Among other things, advertisements will in future be required to include the statement “Caution! Borrowing money costs money” or equivalent wording. In addition, advertising must not suggest that obtaining credit or another form of financial accommodation improves the consumer’s financial situation or increases the consumer’s standard of living. These more restrictive advertising requirements must be taken into account in the distribution of vehicle financing products, including at the point of contact between consumers and motor vehicle dealers.

Subject to limited exceptions, tying practices will be prohibited in the future. Any transactions unlawfully tied to a consumer credit agreement and concluded in breach of these provisions will be void. In addition to payment protection insurance products, which were already covered under the previous regime, all other financial products and financial services will now fall within the scope of these restrictions. The practice sometimes encountered in vehicle financing, whereby the economic value of the transaction is generated from a package consisting of a consumer credit agreement or other financial accommodation together with additional financial products, particularly insurance products, is therefore unlikely to remain permissible in its current form.

The requirements governing the creditworthiness assessment for consumer credit agreements and other financing arrangements will become more stringent. Whereas previously it was sufficient that there were no significant doubts regarding repayment, a thorough assessment must now indicate that repayment is likely. Furthermore, the assessment must, where necessary and appropriate, be based on relevant and accurate information concerning the consumer’s income, expenses and other financial and economic circumstances. As a result, decisions on the granting of credit are likely to become more restrictive, documentation requirements more extensive, and credit-granting processes longer. This may present a particular challenge for vehicle financing, which often relies on immediate credit decisions.

Numerous detailed provisions will change the requirements applicable to mandatory pre-contractual information, including the introduction of a new category of pre-contractual information, namely general information on the credit products offered, as well as the content of the information concerning the right of withdrawal and contractual terms. Creditors and credit intermediaries involved in vehicle financing must adapt their entire credit documentation framework to the new requirements by 20 November 2026.

Alongside the many stricter regulatory requirements applicable to consumer credit, a significant simplification will also be introduced. The current requirement for written form in order to conclude consumer credit agreements and other financing arrangements will be abolished, and in future the conclusion of such agreements in text form will be sufficient. Accordingly, from 20 November 2026 it will no longer be mandatory to obtain either the consumer’s handwritten signature on the credit agreement or the consumer’s consent by means of a qualified electronic signature. As a general rule, text form will suffice.

This will enable fully digital vehicle financing processes for consumers, subject to compliance with certain requirements, including the conclusion of agreements electronically. However, where such a process is used, the consumer must be informed of the significance of selecting the relevant box, and the consumer’s declaration must clearly and unambiguously express the intention to conclude the agreement.

Any creditor or credit intermediary wishing to make use of these possibilities must adapt its relevant processes, including its credit application process, in good time before 20 November 2026.

Finally, not only the captive finance companies of motor vehicle manufacturers and independent leasing companies and banks will become subject to more extensive regulation, but also credit intermediaries involved in vehicle financing. This particularly affects larger motor vehicle dealers and other distribution partners (with more than 250 employees or annual turnover exceeding EUR 50 million, or an annual balance sheet total exceeding EUR 43 million), which from 20 November 2026 will require authorisation as credit intermediaries. Under the previous regime, such entities were exempt from the authorisation requirement where they arranged financing solely in connection with the sale of their own products or services.