If an installment loan is repaid prematurely, many interest can be saved. It is often even worth replacing a current loan with a new loan, if it is cheaper. However, do not spontaneously switch to the next bank to redeem your loan, but use our installment loan calculator to redeem the existing installment loan early. The neutral online comparison helps to conclude a cheapest loan contract. However, many banks require prepayment penalties. We explain how to redeem an installment loan, which notice periods have to be observed and which costs the bank may charge. The story is on http://www.design-pixel.pl/installments-loans-online-apply-for-installment-loan-online/
This is how it works: It is possible to redeem installment loan at any time
The new legal situation applies to loan contracts concluded as of June 11, 2010. Pursuant to Section 500 (2) of the German Civil Code, borrowers can meet their obligations under a consumer loan contract early at any time and redeem their installment loan. A notice period does not have to be observed.
In this case, the bank is obliged to waive all interest that would have accrued after the loan had been repaid in full (section 501 of the German Civil Code). In this case, however, the bank may request prepayment penalty. Legislators allow a maximum of 1.0 percent of the redeemed balance. If there is a maximum of one year between the time of the early repayment and the end of the originally agreed term, the compensation is limited to 0.50 percent of the transfer balance according to § 502 BGB.
However, many banks waive prepayment penalties and grant free partial and / or full repayments. It is recommended to take this option into account when making the next installment loan comparison. The comparison calculator on Astro finance enables a quick and clear comparison of the conditions for special payments.
Termination of the loan should be sent to the bank in writing and at the same time as the transfer balance is transferred. If there is residual debt insurance for the canceled loan, this is automatically canceled. The contributions to these policies are usually paid in advance as a single premium. You will get back the portion of the premium that has not been used up – but reduced by a cancellation discount.
When is early repayment worthwhile?
If you can replace an installment loan with funds that are not required, it is worth it in most cases. If the interest rate you pay for the loan significantly exceeds the interest you receive from your investment (e.g. in a checking or call money account), early repayment is generally cheaper.
Sometimes it can even be worthwhile to take out a new loan to repay an existing loan. Such debt restructuring is worthwhile if the new loan can be taken out on significantly better terms. This is e.g. For example, if the interest rate level has dropped in the meantime, your personal credit rating has improved, or you did not take a close look at the last installment loan comparison and chose a bad offer. If you are servicing a relatively expensive loan, you can check debt restructuring with an installment loan calculator. Whether the exchange of the loans is worthwhile depends on the difference in interest rates between the new and old loan and the prepayment penalty. If in doubt, use a premature installment loan calculator to calculate the savings.
End existing installment loan contract by replacing it
By replacing the existing installment loan, you can react to the lowering of the interest rate on installment loans and save money if the entire financial concept fits your current financial profile. Loans with a variable interest rate in a high-interest phase become a burden on the borrower faster than expected, who should consider whether a better solution can be found by early repayment of the installment loan.
Try different variants in the installment loan calculator before you decide to pay off the installment loan. Additional processing fees may affect switching to another bank. The savings must be reasonable after deducting all costs incurred by the previous and the new bank, only then a debt rescheduling makes sense.
Compare and check whether it is worth paying off the installment loan early
Use our free installment loan calculator to check whether it is worth paying off the current loan early. For example, if you have a long-term real estate contract with a fixed interest rate and over time the interest rate on real estate loans decreases dramatically, it is worth checking out to get comparative offers. Sometimes the previous lender agrees and agrees to adjust the real estate loan agreement to the new conditions.
If your negotiations are unsuccessful, other bank offers can be compared for a possible redemption of the installment loan. The contractually stipulated fees for possible prepayment penalties must be factored in to calculate whether there is any savings in changing the bank. If the fixed interest period for your loan contract expires, depending on the loan contract you have chosen, you currently have up to three months to obtain alternative offers or to make a new interest agreement with your previous bank. Get advice from several experts and only make your decision when you are really convinced.
The amount of the interest is fixed or variable
If you have a contract with fixed interest, the advantage is that you are not affected by interest rate increases and the disadvantage that you are not taken into account when interest rates are lowered. A loan agreement with variable interest rates can become an unreasonable cost burden in times when interest rates are very high. As soon as you think about debt restructuring, you have to draw up a cost plan that compares both bank offers or use a comparison calculator to check which bank has better offers for the entire term. The annual fluctuations in the interest rate level should only be reacted to if the possible debt rescheduling results in significant savings after deducting all costs.
Our comparison portal informs you free of charge about the current interest rates and possible processing fees, so that you are always up to date with the latest loan offers. There are installment loans that you can use freely after approval. Dedicated installment loans are often cheaper, but may only be used for the intended purpose. In the event of a possible debt rescheduling, these types of credit must be taken into account if you plan to increase the loan amount as part of the debt rescheduling.
Conclusion: Early repayment is possible at any time and saves interest
Consumer loans can be repaid early at any time without notice. The bank must then waive all interest that would have accrued after the repayment. However, a prepayment penalty of up to 1.0 percent of the transfer fee may apply. Nevertheless, early repayment is almost always worthwhile because the money required for this does not earn interest on call money or checking accounts. In the case of very expensive loans, a transfer can even pay off with a new loan. There are some special cases: If a loan was taken out before June 11, 2010, other rules may apply.