Consumer Credit in France: Your Rights as a Borrower

What Consumer Credit Law Covers — and What It Does Not

The French consumer credit framework is codified in Articles L 312-1 and following of the Code de la consommation. It applies to credit agreements between a professional lender and a borrower who is acting outside any commercial or professional activity — a natural person borrowing for personal purposes (C. consom. Art. L 311-1, 2°). Companies and legal entities cannot rely on this framework, even if they try to by agreement, with narrow exceptions.

The regulation covers credit between €200 and €75,000 (C. consom. Art. L 312-1). These thresholds apply to the total credit amount — the maximum sum made available under the agreement — without counting any amounts paid upfront or the cost of the credit itself (interest, fees, insurance). Where a borrower uses several lenders to finance the same purchase, the rules apply to each individual loan within the thresholds even if the total finance obtained exceeds €75,000.

Several types of credit fall outside the framework entirely, most importantly: credit for purchasing or retaining rights in land or buildings; credit secured by a mortgage or equivalent charge over residential property; overdrafts of less than one month; and interest-free credit repayable within three months with no or negligible charges (C. consom. Art. L 312-4).

The lender is any person who grants or commits to grant credit in the course of their commercial or professional activities — banks, financial institutions, payment institutions within their permitted scope, and any vendor or service provider who finances a purchase directly. Loans between private individuals outside any commercial activity fall entirely outside the framework.

Before You Sign: What the Lender Must Give You

Advertising standards

Every credit advertisement must carry the statutory warning: « Un crédit vous engage et doit être remboursé. Vérifiez vos capacités de remboursement avant de vous engager » (C. consom. Art. L 312-5). Advertisements suggesting that credit is easily available regardless of a borrower's financial position are prohibited. Any advertisement that quotes figures must include the TAEG, the total credit amount, the duration, the monthly repayment, and the total amount repayable — all illustrated by a representative example.

The standardised pre-contractual information sheet (FIPEN)

Before any contract is signed, the lender or credit intermediary must give the borrower a standardised information sheet covering: the type of credit; the total amount and conditions of drawdown; the duration; the repayment schedule; the nominal interest rate and whether it is fixed, variable, or adjustable; the TAEG with a representative calculation; any mandatory insurance or security requirements; all charges; the right to withdraw; the consequences of missed payments; and the early repayment right (C. consom. Art. L 312-12 and R 312-2).

Beyond the written sheet, the lender must provide personalised oral explanations allowing the borrower to assess whether the credit suits their needs and financial situation, including the consequences — in the event of default — for the borrower's situation (C. consom. Art. L 312-14).

The solvency check

Before committing to any credit, the lender must verify the borrower's solvency using sufficient information, including a mandatory consultation of the FICP — the national database of credit repayment incidents maintained by the Banque de France (C. consom. Art. L 312-16). An entry in the FICP does not automatically prevent a lender from offering credit; it is one factor in their assessment, not a prohibition.

The contract offer: form and binding period

The credit offer must be made on paper or another durable medium, in as many copies as there are parties, with a prominent boxed summary setting out the essential terms in larger print. Once the offer has been remitted or sent, the lender is bound to maintain its terms for a minimum of 15 days (C. consom. Art. L 312-18).

A lender who grants credit without delivering a contract meeting all statutory requirements loses the right to charge any interest — the sanction of déchéance du droit aux intérêts (C. consom. Art. L 341-4). The same sanction applies where the TAEG is omitted or incorrectly stated.

Your 14-Day Right to Walk Away

Once you have accepted a consumer credit offer, you have 14 calendar days to change your mind — without giving any reason and without any penalty (C. consom. Art. L 312-19). The period runs from the day of acceptance and includes weekends and public holidays. A detachable withdrawal form must be attached to your copy of the contract, though using it is not mandatory — any method of clearly communicating your decision is sufficient.

Exercising the withdrawal right prevents the contract from forming entirely. Any linked insurance contract also falls away (C. consom. Art. L 312-23). If funds have already been made available to you before you withdraw, you must return the capital within 30 calendar days together with interest calculated at the agreed rate from the date of drawdown to the date of repayment. No other charge, penalty, or early repayment indemnity can be demanded (C. consom. Art. L 312-26).

During the Contract: Rights and Obligations

Annual information statement

For all consumer credit products except hire-purchase and lease-with-option, the lender must provide the borrower with the outstanding capital balance at least once a year, on paper or another durable medium (C. consom. Art. L 312-32). Failure to comply carries a fine of €1,500 per breach.

Early repayment

You can repay your consumer credit in whole or in part at any time (C. consom. Art. L 312-34). Any clause requiring advance notice is void (Cass. 1ère civ. 30-4-2014 n° 13-13.641). If you repay early, the interest and charges for the remaining term are not due. The lender can only charge an early repayment indemnity where the repaid amount exceeds €10,000 in any 12-month period. The indemnity is capped at:

• 1% of the repaid amount if more than one year remains on the contract
• 0.5% of the repaid amount if one year or less remains
• In all cases, no more than the total interest the borrower would have paid for the remaining term

No other indemnity or fee can be charged for early repayment. The lender cannot capitalise unpaid interest or compound it (Cass. 1ère civ. 9-2-2012 n° 11-14.605).

What happens if you miss a payment

At the first missed payment, the lender must inform you in writing of the consequences: immediate demand for the outstanding capital and unpaid interest; possible termination of any linked insurance; and in hire-purchase situations, repossession of the financed asset (C. consom. Art. L 312-36).

If the lender terminates the contract and demands immediate full repayment, they can claim a maximum indemnity of 8% of the outstanding capital at the date of default. If the lender does not demand immediate repayment but there are overdue instalments, the maximum indemnity is 8% of those overdue instalments; any postponed instalments carry a maximum supplement of 4% (C. consom. Art. L 312-39, D 312-16 and D 312-17).

A court can grant a borrower in genuine difficulty a délai de grâce of up to two years to restructure payments, during which enforcement proceedings and default penalties are suspended (C. civ. Art. 1343-5; C. consom. Art. L 314-20).

The FICP: The National Repayment Incidents Database

The FICP — fichier national des incidents de remboursement des crédits aux particuliers — is maintained by the Banque de France and records credit repayment incidents for non-professional borrowing and over-indebtedness proceedings (C. consom. Art. L 751-1).

Lenders are required to report incidents de paiement caractérisés: for monthly-repayment credit, any default covering at least two consecutive instalments; for other credit, any instalment unpaid for more than 60 days; and for any credit, any case where the lender initiates legal proceedings or accelerates the loan after a formal notice that remains unanswered. Before the registration, the lender must inform the borrower in writing that the incident will be reported to the Banque de France after a 30-calendar-day period, unless the situation is regularised in the meantime.

Information is retained for a maximum of five years from the date the incident became reportable. Entries are removed earlier once full payment has been declared, or immediately if the declaration is found to be erroneous. No charge can be levied on the borrower for registering an incident. The borrower can access their own FICP information under data protection law.

The Guarantor: Protections Since January 2022

A lender may require a personal guarantee (cautionnement) as a condition of granting credit. Since the reform implemented by Ordonnance 2021-1192 of 15 September 2021, the rules protecting guarantors who are natural persons are now integrated into the Civil Code and apply to all guarantees concluded from 1 January 2022 onwards.

The guarantor must personally write and sign a specific statement confirming they are committing as guarantor and acknowledging the maximum amount — in both words and figures — for which they are liable. If there is a discrepancy between the two, the lower amount prevails (C. civ. Art. 2297). This mention need not be handwritten — it can be given electronically since the 2022 reform.

Where a natural person guarantees a loan to a professional lender and the commitment was manifestly disproportionate to their income and assets at the time of signing, the guarantee is reduced to the amount the guarantor could have committed to at that date (C. civ. Art. 2300). The disproportion is assessed at the moment of signing — unlike the old rule, which also allowed the lender to escape the sanction by showing the guarantor could meet the obligation when called upon.

Types of Consumer Credit

Linked credit (crédit affecté)

A linked credit is one that serves exclusively to finance a specific purchase or service agreement — the two contracts form a single commercial transaction (C. consom. Art. L 311-1, 11°). The borrower's repayment obligations under the credit do not begin until the financed goods or services have been delivered or performed. If the main contract is cancelled or annulled by a court, the linked credit is automatically cancelled or annulled as well. A revolving credit product cannot be a linked credit.

Revolving credit (crédit renouvelable)

A revolving credit makes a reserve of funds available to the borrower who can draw on it repeatedly up to the agreed limit. The lender must check the FICP each year before renewing the contract; every three years it must verify the borrower's solvency by requesting updated information (C. consom. Art. L 312-75). If a revolving credit is unused for one year, the lender must propose renewal with a document the borrower must sign and return; if not returned within 20 days, the lender must suspend the right to use the credit (C. consom. Art. L 312-82).

Overdraft (découvert en compte)

Authorised overdrafts repayable in more than three months are subject to the full consumer credit framework. Those repayable in one to three months are subject to a lighter version — no personalised explanation obligation and no withdrawal right, but the borrower owes no early repayment indemnity. Overdrafts of less than one month fall entirely outside the framework (C. consom. Art. L 312-84 and L 312-4).

A dépassement — an overdraft that arises tacitly, beyond any agreed facility — must be addressed by the lender if it persists beyond one month (written information to the borrower) or beyond three months (the lender must offer the borrower a formal credit product under the full framework) (C. consom. Art. L 312-93).

Hire-purchase and lease-with-option

These are treated as credit operations and are subject to the consumer credit rules, except that no early repayment indemnity applies and no TAEG need be quoted. If the hirer defaults, the lessor can reclaim the asset, demand unpaid rentals, and claim an indemnity calculated as the difference between the residual contractual value and the actual market value of the repossessed asset at the date of termination (C. consom. Art. L 312-38 and D 312-18).

The TAEG: The Rate That Must Tell You Everything

The taux annuel effectif global (TAEG) is the single standardised rate that captures the true annual cost of credit. It must include not only the nominal interest rate but all mandatory costs imposed by the lender as a condition of obtaining credit: arrangement fees, intermediary commissions, mandatory insurance premiums, account maintenance costs if required, and the cost of any mandatory property valuation (C. consom. Art. L 314-1 and R 314-4).

Excluded from the TAEG are notarial fees, property taxes, and charges triggered by the borrower's own breach of contract. The TAEG is calculated using the actuarial equivalence method mandated by the Code (C. consom. Art. R 314-3). It must appear in every written offer, every signed contract, and every advertisement for credit.

When Debts Become Unmanageable: The Over-Indebtedness Procedure

The French surendettement (over-indebtedness) procedure offers a legal path to relief for individuals who can no longer meet their debts (C. consom. Art. L 711-1 et seq.). It is available to natural persons acting in good faith who face a manifest inability to meet all their debts, both due and yet to fall due. Owning a primary residence whose value exceeds total debts does not on its own disqualify a debtor from the procedure.

The procedure does not apply to merchants, craftspeople, farmers, and others covered by the commercial insolvency regime of the Code de commerce (C. consom. Art. L 711-3). However since May 2022, entrepreneurs individuels — sole traders with a separated professional and personal patrimony — may benefit simultaneously from a commercial insolvency proceeding for their professional patrimony and a surendettement procedure for their personal patrimony.

Good faith

Good faith is presumed; it is for creditors to prove the contrary. Lack of good faith may be established where the debtor made false declarations, concealed or attempted to conceal assets, or incurred new debts or made disposals without creditors' consent during the proceedings (C. consom. Art. L 761-1). Negligence or inadvertence on the debtor's part does not constitute bad faith (Cass. 2ème civ. 2-7-2020 n° 18-26.213 F-PBI).

Filing the dossier

The debtor files a standardised dossier with the commission de surendettement for their département. Filing can be done at a Banque de France counter, by post, or online. Upon receipt the commission registers the filing with the FICP. The commission must rule on admissibility and decide on orientation within three months. If it fails to act within that period, the interest rate on all outstanding credit automatically reduces to the legal interest rate for the following three months.

Outcomes

Depending on the debtor's situation, the commission may propose: a conventional repayment plan negotiated with creditors; binding measures imposed by the commission (debt rescheduling, interest rate freezes, partial write-offs) if no agreement is reached; or, in the most severe cases — where the debtor's situation is irredeemably compromised — referral to a court for a procédure de rétablissement personnel, which may result in the discharge of all personal non-professional debts, with or without liquidation of personal assets.

This article is provided for general information and educational purposes only. It does not constitute legal advice. Consumer credit law in France is detailed and fact-sensitive. The rules described here apply to the consumer credit framework under the Code de la consommation. Mortgage credit, business credit, and other lending products are governed by separate regimes. If you have a specific dispute or compliance question, seek advice from a qualified French lawyer (avocat) or contact a consumer protection association.