On the 30th of October 2025, the CJEU delivered a judgment in the joined cases of consumers KI and FA against Mercedes-Benz Bank AG and Volkswagen Bank GmbH in C-143/23 , advancing the interpretation of Articles 10 and 14 of Directive 2008/48/EC on Consumer Credit.
The consumers entered into a credit agreement with their respective banks to purchase a motor vehicle for private use; where the car dealers from whom the vehicles were purchased acted as credit intermediaries and to whom the loans were paid in directly. The credit agreements did not inlcude the interest rate applicable to late payments at the time the agreement was concluded. Months and years after the contract had been concluded, the consumers notified their banks that they wished to withdraw from their credit agreements, arguing that the standard 14-day period did not begin to run due to omissions in the mandatory information included in their contracts. The referring Landgericht Ravensburg asked several questions to the CJEU.
The first question addressed by the CJEU was whether the consumers' right of withdrawal began to run despite the absence of mandatory information in their contract. According to Article 14(1)(b) of Directive 2008/48 the 14-day withdrawal period begins to run only on the day on which the information provided for in Article 10 has been received by the consumer, if that day is later than the day on which the credit agreement was concluded. Article 10(2)(l) provided that a credit agreement must state, in a clear and concise manner, the interest rate applicable to late payments, arrangements for its adjustment and any charges payable for default.
In its analysis, the CJEU emphasises the importance of mandatory information for consumers' informed decision-making, aimed at helping consumers in a weaker position vis-à-vis the bank. The CJEU then underlined the importance of informing consumers of the specific interest rate for late payment to enable consumers to be aware of the consequences of any late payment, information which is likely to influence not only the consumer’s decision to enter into the agreement, but also their ability to organise the repayment of the loan.
In view of the these reasons, the CJEU ruled that Article 10(2)(l) and Article 14(1)(b) of Directive 2008/48 must be interpreted as meaning that the withdrawal period provided for in Article 14(1) does not begin to run until the credit agreement does not specify, in the form of a specific percentage, the interest rate applicable in the event of late payment at the time of conclusion of the agreement, and until such information has been duly communicated to the consumer. With this, the CJEU confirmed its earlier position in C-33/20 (see our analysis here).
The second question tackled by the CJEU is interesting. The referring court asked directly whether the consumers’ potential intention to abuse their right can be considered here, in particular, that the consumer continues to use the vehicle until the national courts have ruled on the validity of the withdrawal and that the consumer refuses to pay compensation for the loss of value of that vehicle. The CJEU emphasised that a general legal principle is that EU law cannot be relied on for abusive or fraudulent ends. However, in the particular situation, the creditor cannot claim that the exercise of the right of withdrawal is unfair, as the withdrawal period has not, in such a case, begun to run. Under the circumstances, the credit cannot reply on the consumer’s improper exercise of the right of withdrawal provided for in Article 14(1).
The third question was what compensation should be provided to the creditor for the use of the vehicle. The CJEU referred to the 14th recital of the Directive, which stated that it was for the Member States to determine the conditions and arrangements following exercise of the right of withdrawal. Directive 2008/48 therefore grants Member States a margin of discretion leaving them to regulate matters relating to the return of the goods financed by the credit, which must follow the principle of effectiveness requiring that national provisions governing the consequences of the exercise of the right of withdrawal do not undermine the effectiveness and efficiency of that right to such an extent that it becomes impossible or excessively difficult to practice to exercise the right.
The CJEU, however, emphasised that compensation must be proportionate to the vehicle’s depreciation and its condition at the time of its return. Subject to the verifications to be carried out by the referring court, the CJEU was of the opinion that a method of calculation based solely on the difference in price between the purchase and resale of the vehicle, which includes factors unrelated to the use of that vehicle, such as commercial margins and resale costs – determined unilaterally by the car dealer – as well as value added tax, does not allow for the assessment of the depreciation of that vehicle resulting from its use by the consumer. In particular, if these circumstances are considered regardless of whether the vehicle has not been registered or used before the right of withdrawal is exercised. The CJEU concludes that this method, therefore, appears to impose on the consumer a burden resulting exclusively from the exercise of his or her right of withdrawal, and is likely to result in compensation that is disproportionate to the purchase price of that vehicle, making the exercise of the right of withdrawal impossible or excessively difficult to use in practice.
The CJEU ruled that Article 14(1) of Directive 2008/48 must be interpreted as precluding national case-law to calculate the amount of compensation for loss of value owed by consumer to the creditor by deducting from the sale price charged by the dealer at the time of the vehicle’s purchase the purchase price paid by the dealer at the time of the return of that vehicle, provided that that the method of calculation includes factors unrelated to the consumer’s use of that vehicle.
Fourth, the CJEU also addressed the question of payment of the interest for the credit agreement, ruling that Article 14(1) of Directive 2008/48 must be interpreted as not precluding national legislation under which a consumer who, after withdrawing from a consumer credit agreement linked to a vehicle purchase agreement, is required to pay the interest provided for in that first agreement for the period between the payment of the loan funds to the seller of the financed vehicle and the date of return of the vehicle to the creditor or seller.
Finally, the CJEU explicitly confirmed that Directive 2008/48 must be interpreted as not harmonising completely the rules relating to the consequences of the consumer’s exercise of his or her right of withdrawal from a credit agreement linked to a vehicle purchase agreement.
