Stricter credit rules from November: Protection against debt traps for younger people

Stricter credit rules from November: Protection against debt traps for younger people

From November 20th things will get serious in Germany for everyone who would like to grab a small loan. Stricter regulations for small and short-term loans of up to 200 euros are coming into force, and this wasn't just decided. The focus is clearly on protecting low-income households in order to counteract excessive indebtedness. SWR reports that this also includes a credit check – even for minimal loans. If repayment is not possible, a loan will not be granted at all. A measure that is urgently needed in the “buy now, pay later” concept, which is particularly popular among young people.

You could say that the Germans have small loan fever. In recent years there has been an increase in newly concluded loan agreements of over ten million. Particular attention is paid to the age groups between 18 and 30, where appropriate Test.de Around 744,000 young people complain about debts. The Federal Association of Consumer Organizations also warns of the risk of over-indebtedness caused by such offers. The new European Consumer Credit Directive brings a breath of fresh air in this regard and the federal government also sees a need for action.

Credit checks for small amounts

What exactly does the new regulation bring? Experts agree that credit checks on all loan applications, no matter how small, will now be the new standard. These also include self-disclosures and payslips to really ensure that no one is left on the wrong track. Loans are rejected if there is no ability to repay the loan. World brings the important details to the point and also describes how the regulations of large online retailers will differ. There are some exceptions to note here!

The numbers on the use of small loans speak for themselves: the proportion of new loan agreements has doubled since 2020. More and more people are turning to credit offers to cover their everyday expenses, which can prove to be wise in the best case scenario, but can also open the door to excessive indebtedness. There are already 5.2 million current loans registered, particularly in the 35-44 age group.

Christmas markets and other November highlights

In addition to these financial questions, there are some exciting events that characterize the month of November. The Christmas markets in Rhineland-Palatinate open from November 21st, while Baden-Württemberg opens its doors to visitors from November 18th. If you're still looking for a reason to get your Christmas presents in a festive atmosphere, you could be happy now.

Black Friday also awaits us on November 28th – a hot day for bargain hunters! However, consumers should be careful. Consumer advocates warn that price manipulation can also occur on this big day. To put an end to it all, the new regulations for small loans may be a step in the right direction to make shopping safer.

Another important date is St. Martin's Day on November 11th, which is celebrated with lantern parades, while events will take place in cities such as Mainz and Neustadt to commemorate the Kristallnacht on November 9th in Rhineland-Palatinate. A month full of traditions that is not only about consumption, but also offers space for important commemoration.

Social media boom influences borrowing

The situation is rounded off by the role that smartphones and social media play here. Many young people, especially between the ages of 16 and 25, quickly end up in financial difficulties due to clear installment offers. In this country, the over-indebtedness rate among young people has recently increased, which shows that it is necessary to take a critical look at these practical offers. The hope now lies in the new regulations, which will not only make borrowing safer, but also help young people keep track of things.