Financial Terms Glossary: Germany Explained
Understand German finance, insurance and energy terms in minutes. Each term is explained in plain English - with an example and the legal reference. Made for expats and newcomers in Germany.
Key Takeaways
- •17 terms across finance, insurance and energy - explained briefly and without jargon.
- •Every term comes with a simple definition, a practical example and the relevant legal reference.
- •Available in German, English and Turkish - handy when you have just moved to Germany.
- •Sources: Gesetze im Internet (German law), BaFin, SCHUFA, Verbraucherzentrale and Bundesnetzagentur.
Finance
Effective Interest Rate
The effective interest rate shows the true annual total cost of a loan as a percentage, including all fees and charges.
Schufa Score
The Schufa Score is a point value from 100 to 999 that rates a person's creditworthiness in Germany - the higher the score, the better your terms.
Repayment Rate
The repayment rate is the percentage of the loan principal that is repaid annually - excluding interest.
Special Repayment
A special repayment is an additional payment on the loan outside of regular installments, which reduces the remaining debt and thus the interest burden.
Annuity Loan
An annuity loan is a loan with constant monthly payments, where the ratio of interest and principal portions shifts over the term.
Creditworthiness
Creditworthiness describes the ability and willingness of a person or company to meet their financial obligations.
Insurance
Deductible
The deductible is the amount the policyholder must pay out of pocket before the insurance company pays a claim.
Coverage Amount
The coverage amount is the maximum sum an insurance company will pay in case of a claim. It limits the insurer payment and should match the potential damage.
No-Claims Class
The no-claims class (SF class in German) determines the premium rate in car insurance based on claim-free driving time.
Premium Exemption
With premium exemption, an insurance contract continues without further premium payments, but benefits are reduced accordingly.
Occupational Disability
Occupational disability (Berufsunfahigkeit) means you can probably no longer practice your most recent job, in whole or in part, due to lasting illness.
Energy
Basic Supply
Basic supply is the legally guaranteed electricity and gas delivery by the local basic supplier when no other contract exists.
Network Charges
Network charges are fees for using the electricity or gas grid, collected by network operators and added to the energy price.
Kilowatt Hour
The kilowatt hour (kWh) is the unit of measurement for energy consumption - one kWh equals the consumption of a 1,000-watt device for one hour.
Green Electricity
Green electricity is electrical energy from renewable sources such as wind, sun, water, or biomass. Note: the term itself is not legally protected in Germany.
Working Price
The working price is the price per kilowatt hour of electricity or gas consumed - the variable part of energy costs.
New Customer Bonus
The new customer bonus is a one-time payment or credit that energy providers offer new customers as a switching incentive.
Sources & Methodology
We check every definition against the relevant law and the official publications of the responsible authorities. Each term shows its legal reference and we update the content regularly.
- •German statutes (§ PAngV, § BGB, § VVG, § EnWG) via Gesetze im Internet
- •BaFin - financial supervisory authority (credit & insurance)
- •SCHUFA - on creditworthiness and the score procedure
- •Verbraucherzentrale & Bundesnetzagentur (energy)
Note: This glossary is for information only and does not replace individual legal, tax or financial advice. Last updated: 21 June 2026.