Buy now pay later: new credit rules from 20 Nov

Paying later for online purchases is about to become a regulated loan in Germany. From Friday, 20 November 2026, many buy now pay later offers from services such as Klarna and PayPal, as well as small loans under 200 euros, fall under German consumer credit law for the first time. Providers will have to check whether you can afford to repay before they agree, give you clear information about costs in advance, and allow you to cancel the credit within 14 days. The change comes one week before Black Friday on 27 November, so the first big shopping rush of the season will take place under the new rules.

The new law implements the revised EU Consumer Credit Directive (Directive 2023/2225, often called CCD II) and applies across the EU from the same date. The Bundestag passed the German version in April, and the Bundesrat, the chamber of the federal states, approved it on 8 May, as reported by the legal news service beck-aktuell and the finance portal biallo.

What counts as credit from 20 November

Until now, German law contained several exceptions that kept most "pay later" options outside the protection of credit rules. Loans below 200 euros, interest-free and fee-free loans or payment deferrals, and loans repaid within three months at low cost were largely exempt. These gaps are exactly where most buy now pay later products operated. The new rules close all three exceptions. According to the European Consumer Centre Germany (EVZ), the rules apply to every contract concluded on or after 20 November. Purchases and instalment plans agreed before that date continue under the old law.

For PayPal customers, this means the popular "pay after 30 days" option now counts as a consumer loan, according to the tech site inside digital, while PayPal's instalment payments were already treated as credit and gain additional obligations. With Klarna, the change matters above all for its purchase on invoice. If Klarna or another payment service, rather than the shop itself, grants the deferral, the new law applies, the Berliner Zeitung and inside digital both explain.

A classic purchase on invoice (Kauf auf Rechnung) can stay outside the new rules. This applies when the shop itself gives you time to pay, without interest or fees and without a third party financing the deferral. According to both outlets, smaller retailers may allow up to 50 days, while large online retailers may allow at most 14 days. Certain debit cards that bundle payments and settle them later without interest also remain exempt.

Credit checks and your new rights

The most noticeable change is the creditworthiness check (Kreditwürdigkeitsprüfung). Before every buy now pay later contract, the provider must assess whether you are likely to be able to repay, however small the amount. Existing debts, including other open "pay later" purchases, must be taken into account. Lenders may not use data from social networks or health data for the check. If a decision is made automatically and you are turned down, you can ask for an explanation and for a human to review the decision.

You also gain a right of withdrawal (Widerrufsrecht). You can cancel the credit agreement within 14 days without giving a reason, even for small amounts. If the provider fails to give you the required information, the deadline is extended, but it ends no later than twelve months and 14 days after the contract was concluded, according to the EVZ and biallo. Before you sign, providers must tell you about costs, repayment dates and the consequences of paying late. Inside digital reports that PayPal will show a warning on its interest-free products that credit can lead to costs if you pay late.

If you get into financial difficulties, lenders must offer ways to make repayment easier, such as a payment break, a longer term or lower instalments, before taking enforcement steps, as both beck-aktuell and the EVZ point out. The EVZ adds that credit advertising may no longer suggest that taking out a loan will improve your financial situation. Credit agreements can now also be concluded in text form, for example by email or in an app, without a handwritten signature.

Why buy now pay later is being regulated

The reform responds to a real debt problem. In a survey by Germany's financial regulator BaFin, cited by the Berliner Zeitung and inside digital, 14 percent of buy now pay later users said they had already lost track of their open bills, and among people under 30 the figure was 24 percent. Twelve percent had built up more than 500 euros of debt from such purchases. According to the Berliner Zeitung, about one in five people aged 18 to 60 in Germany pay later when shopping online, and PayPal says more than 15 million customers in Germany use its pay-after-30-days or instalment options, inside digital reported.

Payment providers say little will change at the checkout for most customers. PayPal told inside digital that it already carries out credit checks for its pay later products and that the law now makes them mandatory. However, the news site netzwelt warns that some purchases that went through easily before could now be declined, especially for people with weak credit data or several open payments. Shoppers relying on a pay later option for a large Black Friday purchase should not assume it will be offered.

What the buy now pay later rules mean for expats

If you have recently moved to Germany, credit agencies such as Schufa may hold little data about you, so it pays to prepare before you rely on a pay later option. The Berliner Zeitung recommends paying off open pay later amounts before you shop, requesting your free data copy from Schufa early because the agency can take up to a month to reply, and keeping a second payment method ready, such as a direct debit, a card or an invoice from the shop itself. Our guide to credit and loans in Germany explains the basics of borrowing here, and an earlier report covers stricter rules on credit scoring.

Keep an eye on the total of all your instalments, not just the single payment, and note the 14-day withdrawal deadline for each purchase. Netzwelt also warns that fraudsters may use the new rules as a pretext for fake emails claiming to be from PayPal or Klarna and asking you to update your data or confirm a credit check, so log in through the official app instead of clicking links. If repayments become a problem, contact the lender early. Free debt counselling (Schuldnerberatung) is offered by local authorities, welfare organisations and consumer advice centres, while the EVZ advises caution with commercial services that promise quick help or offer yet another loan.