Loan processing fees: Significant excess of actual costs

Nov 28, 2025 Benn-Ibler Rechtsanwälte

The Supreme Court (OGH) recently ruled in two cases that the use of certain clauses in loan agreements constituted a violation of the law. In this case, it dealt with the question of whether a processing fee agreed in a loan agreement is valid if its amount significantly exceeds the actual costs incurred by the bank.

The starting point was a loan agreement concluded in 2017 for EUR 695,000, in which the borrower was charged over EUR 20,000 in “processing fees.” According to the agreement, this was to be a “one-time, term-independent payment for the processing of the loan application, the credit check, and the preparation of the loan documents”; a refund was also excluded in the event of early repayment. The lower courts rejected the borrower's claim for reimbursement.

Permissible flat rates

The Supreme Court emphasized that, according to established case law, loan processing fees are not part of the main obligation to perform, but are subject to content review pursuant to Section 879 (3) of the Austrian Civil Code (ABGB) as additional fees. In contrast to older decisions, it was decisive that such fees usually cover services that are regularly associated with the granting of credit anyway. Additional fees that do not cover clearly definable additional services and oblige the borrower to reimburse the bank for a specifically designated expense may therefore not lead to a gross exceeding of the actual expense.

Although flat-rate charges are generally permissible, they require that the amount invoiced is not grossly disproportionate to the actual costs incurred. The borrower may assume that an amount reported as “expenses” is cost-oriented and does not merely represent a deferred charge for typical activities associated with the performance of the main service.

Actual expenses exceeded

In the present case, the bank had claimed average personnel expenses of 20 to 23 hours. Even applying standard market hourly rates and taking software and administrative costs into account, it was clear to the Supreme Court that the amount charged of over EUR 20,000 significantly exceeded the actual expenses and was not objectively justified. This constituted a gross disadvantage to the borrower.

The agreement on processing fees was therefore deemed null and void, and the bank was obliged to repay the amount. The lower courts had failed to recognize the abuse.

The appeal was ultimately successful. The decision is in line with the recent case law on credit processing fees (in particular 7 Ob 169/24i), according to which a grossly excessive flat-rate fee violates Section 879 (3) of the Austrian Civil Code (ABGB) and is therefore void.

OGH 2 Ob 52/25y (October 23, 2025)