10 terms from CCD II that you should understand

CCD II introduces a whole range of terms that come up in industry discussions, training sessions, and talks with providers. If you don’t want to have to ask for clarification each time, you’ll find the most important terms explained briefly below—along with the context that is truly relevant for merchants.

CCD II: This abbreviation stands for “Consumer Credit Directive II” – the second EU directive on consumer credit (Directive (EU) 2023/2225 of 18 October 2023). It replaces the previous Directive 2008/48/EC and will apply in Germany from 20 November 2026.

General Consumer Loan (AVD): This is the legal umbrella term for consumer credits that are not secured against real estate. It includes traditional consumer loans, instalment purchases, BNPL (Buy Now, Pay Later) financing, and, from 20 November 2026, also payment deferrals and micro-loans.

Buy Now, Pay Later (BNPL): This is an umbrella term for payment models in which the customer receives the goods immediately and pays later—either through a one-off payment deferral or in instalments. Well-known providers include Klarna, Unzer, PayPal Pay Later, and Afterpay. With CCD II, BNPL is systematically included in the scope of consumer credit law for the first time.

Annual Percentage Rate (APR): The total cost of a loan, expressed as an annual percentage—this includes interest, processing fees, and other charges. Unlike the nominal interest rate, the APR reflects the actual cost to the borrower and is the key figure for comparing credit offers. When advertising financing options, the APR must be disclosed.

Standardised European Consumer Credit Information (SECCI): This is a mandatory form designed to present consumers with the key terms of a credit agreement in a standardised format before the contract is signed. It includes, among other things, the loan amount, duration, nominal interest rate, annual percentage rate (APR), total amount, and cancellation rights. CCD II retains the SECCI but adapts the form to include the new mandatory information.

Creditworthiness Assessment: The legally required check to determine whether the consumer is likely to be able to repay the loan. CCD II raises the standard for general consumer loans to the level that previously applied only to mortgage loans: a loan may only be granted if repayment is probable (§ 505a BGB). Certain data sources—such as social media data or health data—may no longer be used for this assessment.

Nominal Interest Rate: This is the basic interest rate applied to the disbursed loan amount, excluding additional costs. Unlike the annual percentage rate (APR), it does not include fees or other charges. When advertising financing offers, both the nominal interest rate and the APR must be shown so that the consumer is aware of the total cost.

Text Form (vs. Written Form): This is the legal minimum requirement for declarations where a handwritten signature is not necessary, as regulated in § 126b BGB. An email, a PDF in a customer account, or a digitally confirmed contract text satisfy the requirement for text form. CCD II lowers the formal requirements for general consumer loans from written form to text form—making fully digital contract conclusion possible. In practice, this means that for traditional consumer loans, a handwritten signature is no longer needed.

Right of Withdrawal and Maximum Withdrawal Period: Consumers can withdraw from credit agreements within 14 days. This period begins once the consumer has been properly informed about their right of withdrawal. Previously, if the information provided was incorrect, the right of withdrawal could be exercised indefinitely (“eternal withdrawal”). CCD II introduces a maximum limit: withdrawal is no longer possible after twelve months and 14 days from the conclusion of the contract.

§ 34k Trade Regulation Act (GewO) – Licensing Requirement for Credit Brokers: This is a newly introduced provision in the Trade Regulation Act, which creates an independent licensing requirement for the commercial brokering of consumer loans. The previous regulation in § 34c(1) No. 2 GewO is therefore repealed. An important exception applies to small and medium-sized enterprises that only finance their own sales. For larger merchants and platforms, the new licensing requirement may be relevant.

Are there legal differences between purchase on account, pay-in-3, or instalment payment? What does pay-in-3 count as; is it already a classic instalment payment, even if no interest is charged for it?

No, there are no differences. All of these payment methods will, in future, fall under CCD II and its extended requirements.