In the context of loan agreements, consumers are often confronted with so-called loan processing fees. These are fees that credit institutions charge for checking and processing a loan. For a long time, such fees were common practice, but their legal admissibility has been the subject of intense debate since several supreme court decisions. The Supreme Court has now ruled that loan processing fees can be reclaimed.
For borrowers, the central question is therefore whether and under what conditions loan processing fees have been effectively agreed and in which cases fees already paid can be reclaimed.
In very many cases, loan processing fees for consumer loans in Austria are not permitted. You can actually recover the loan processing fees.
What are loan processing fees?
One-off processing fees, which credit institutions in Austria usually charge in the amount of around 1 to 3 % of the loan amount, are used for the internal review and administrative processing of a loan. However, according to recent Supreme Court rulings (2024/2025), such fees for consumer loans are often not legally tenable. They can therefore be reclaimed under certain circumstances, especially if they are not transparent or lead to a significant disadvantage for the borrower.
Which loans are affected?
In particular, housing loans, personal loans, building society loans, mortgage loans, consumer loans and framework loans or interim financing may be affected.
Example from practice:
A consumer takes out a personal loan for 20,000 euros. The bank charges a loan processing fee of 2 %, i.e. 400 euros. If it turns out that this fee is unauthorised, the borrower can reclaim the loan processing fees. In addition, interest on arrears can be claimed under certain circumstances. This example illustrates that a legal review can be financially worthwhile.
Differentiation from interest:
Interest is the main payment for the provision of capital and is charged either on an ongoing basis or over the entire term of the loan. It therefore represents the actual consideration paid by the borrower for the use of the funds provided. This is to be distinguished from one-off fees, which banks also charge when the contract is concluded, for example in the form of fixed amounts or percentage surcharges on the loan amount. These are typically intended to cover internal expenses such as checking and administrative processing. According to current Supreme Court case law, however, it should be noted that such flat-rate or percentage-based fees are often inadmissible, particularly in the case of consumer loans, as the bank's expenses do not increase in proportion to the loan amount and are not dependent on the loan amount.
Legal framework:
In accordance with Section 879 (3) ABGB, the Supreme Court judged the agreement of a credit processing fee of 1.5 % of the credit value to be disadvantageous. The legal judgement focuses on the question of whether sufficient transparency is guaranteed in the consumer contract. According to the Consumer Protection Act, in particular Section 6 (3) KSchG, contractual clauses are invalid if they are not formulated clearly or are difficult for consumers to understand. In the aforementioned decisions, the Supreme Court came to the conclusion that precisely such a lack of transparency existed. Specifically, the problem was that the processing fee was not clearly differentiated from other additional items charged, such as for credit checks or property valuations. As a result, it remained unclear which specific service was actually covered by the flat-rate fee. This mixing or overlapping of different cost items ultimately means that the clause as a whole is considered non-transparent and is therefore completely invalid.
Credit processing fees are generally permissible and not automatically unlawful. However, a prerequisite for permissibility is that they are described so clearly and unambiguously that customers can clearly recognise which specific administrative service is being paid for.
Reclaim credit processing fees:
Consumers who wish to check whether they have paid too much can request a refund from the bank in writing or contact experienced legal advice. The reclaiming of unauthorised loan processing fees generally has no influence on the existence of the loan agreement. Cancellation by the bank based solely on the assertion of this claim is generally not permitted under Austrian law.
Even loans that have already been repaid in full do not preclude the reclaiming of unauthorised processing fees. The reclaim is subject to statutory limitation periods. In Austria, the regular limitation period is up to 30 years from the conclusion of the loan agreement. However, a timely review of the loan agreement is crucial here.
Consumers should check their loan agreements carefully and reclaim any unlawfully charged loan processing fees.
My law firm supports clients in reclaiming unauthorised credit processing fees in Austria - in a legally sound and practical manner. I am also happy to work with your legal expenses insurance to enforce your claim
Please contact me for an initial assessment.
Lawyer David Zellinger