Decisive for the early repayment of loans is the exact calculation: Important points on the cost side are possible prepayment penalties or processing fees; On the financial side, the interest savings are far ahead – otherwise: consumer loans can always be repaid in whole or in part before the end of the agreed term. The lender then demands that missed interest payments be compensated by a prepayment penalty. However, if you wish to repay a loan that you have made after the cut-off date, the bank has the right to charge a fee for early repayment. Consumer credit Santander: Expenses to be paid on repayment.
Replace credits ahead of time – prices, notes and information
Overview: 2. When is it advisable to repay a loan early? Of course, the cheapest installment loan is also the one that stands out the most in the case of an early exchange. Test winner 2016, the Norwegian bank, allows its debtors to repay 50 percent of the previous year’s residual debt each year without having to pay a penalty for the early repayment. An early repayment of a loan can lead to high charges.
With conventional installment credits laypersons can also understand the charges incurred in the form of prepayment penalty and calculate themselves. However, if you are rescheduling your debts and may also want to repay several loans ahead of time, you can save a lot if you switch to the right provider. With our current loan test winner NRW you already get loans at an effective interest rate of only 2.90%.
In the case of a real estate loan, a premature repayment to the house bank must be expected. This can be very costly for the borrower. In the case of real estate financing over a period of more than ten years, these can usually be terminated by the end of the tenth year, without the premature repayment of the financing of early repayment being due.
Even if a premature repayment is due, the repayment of the loan may be worthwhile. In any case, the applicable fees and possible savings should be checked before ending the loan!
Replace loan early
What about early repayment if I want to prepay or repay a loan? The early repayment of a loan depends on several factors. These are, on the one hand, the circumstances in which the debtor finds himself and, on the other, the general level of interest rates prevailing on the capital market.
When repaying long-term funding, it may make sense to settle early if interest rates are currently significant. Whenever interest charges can be saved by repaying the debt, an early repayment should be sought. The repayment of loans to finance construction projects is usually possible only after expiry of the fixed interest period.
If you cancel your loan in advance, you must pay the house bank a penalty for the loss of interest. If this value is above or equal to the amount that can be saved by low interest rates, it is not very favorable to repay the loan volume prematurely. Even if no new loan must be completed.
After expiry of the fixed interest period, an early repayment of the loan is certainly possible, as this can save costs for follow-up financing. Borrowers should be able to make an offer from other credit institutions to allow a better comparison of interest rates. Financial market experts recommend the search for a new follow-on lender, which will provide more favorable conditions for the follow-up loan.
Alternatively, borrowers can use the lender to negotiate cheaper offers from other banks. Often it is possible to obtain improved conditions from the previous financier. An early exchange can make sense not only in house financing. Other loan commitments are also tested in the low interest phase.
At the moment, interest rates are so low that early repayment really saves a lot of time. If the loan terms of the new lender are better than the previous ones and you have multiple obligations at the same time, it may pay to reschedule the loans. Sometimes borrowers pay off premature loans because the monthly burdens are too great.
Early repayment is about reducing the monthly burdens of a new, longer-term loan. It is irrelevant for the borrower whether he saves or incurs additional costs. In the case of the early termination of installment loans, there is no legal obligation to provide financial compensation in the form of an early repayment penalty. Nonetheless, some credit institutions have provisions in their credit terms, which also require the payment of such remuneration in the case of an installment loan.
The early repayment can not be demanded if the borrower exercises his statutory right of withdrawal. For other banks, no prepayment penalties are charged, but borrower fees. The current loan conditions for your mortgage lending, you can ask here without obligation and free of charge. To cancel a loan without notice, you should make a loan comparison with a loan calculator.