Are you annoyed about excessive borrowing costs? If you replace your current loan, you can now save a lot of money. Loans taken out years ago have high interest rates compared to current loans.
Even with installment loans with long maturities, a loan repayment can be worthwhile:
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Replace installment loan
A premature redemption or rescheduling can make sense if the agreed interest rate on the existing installment loan is very high and can be saved by repaying the interest payments every month.
If the remaining term is less than a year, a replacement is not useful.
Whether an early repayment is possible depends on the conditions of the credit institutions. In installment loans, however, the conditions are usually designed so that an early repayment is possible at any time.
Before you replace your loan, you should take a closer look at the contractual clauses of the existing financing: Under what conditions can you replace the loan? In this context, especially the date of the conclusion of the contract plays a role.
Replacing mortgage lending
If an existing mortgage lending is to be replaced prematurely, this is not easily possible. Basically, the customer has no claim to repay the loan early.
If the banks nevertheless agree to the payment, they charge a prepayment penalty. The bank calculates the damage caused by the early repayment of the loan.
An exception is made for loans for which a fixed interest period of more than 10 years has been agreed. These loans have a right of termination after a period of 10 years with a notice period of six months.
Credit Loss: Note the date
When the EU Consumer Credit Directive came into force on 11 June 2010, much has changed in the area of credit debt and credit redemption:
Contracts concluded before this date are subject to the old law – three months’ notice and no payment of a prepayment penalty. However, if you wish to repay a loan that you have closed after the balance sheet date, the bank has the right to charge a fee for the early repayment. If the residual maturity is more than one year, the Bank may charge a fee of no more than one percent of the loan amount – less than 12 months 0.5 percent of the loan amount. For this you may replace your loan at any time.
If the lending institution charges a prepayment penalty, you should consider whether the interest savings resulting from the lending will be offset by the charge. In this case, a loan repayment would not be worthwhile.