Replacing loans without prepayment penalty
It is possible to repay a loan before the planned timetable, but this must take into account the prepayment penalty planned by the bank. If a borrower chooses to premature repayment of his loan, the bank has the right to a prepayment penalty, as it would cause economic damage from the interest not received but planned. The sooner the debtor wants to replace his credit, the higher may be the fee for early maturity.
Replacing loans without having to make a prepayment penalty
Under certain circumstances, the loan can be redeemed before the scheduled time and the penalty can be bypassed. There are three cases, how to get out of the contract:
- The expiry of the fixed interest period must be taken into account by the Bank. The term of a fixed interest period is a maximum of ten years. If this term has been exceeded, no prepayment penalty may be demanded.
- Due to a faulty cancellation policy, the payment of a prepayment penalty can be completely eliminated. If the cancellation policy in the credit agreement is incorrect or has been formulated incompletely, the debtor may at any time withdraw from the contract by termination or revocation.
- It should be scrutinized whether the market interest rates have increased during the contract period. If this is the case, the borrower has the option to ask the bank to settle the residual debt that the debtor owns. This would be done through a profitable investment of the sum. In this case, the borrower would also have to pay no prepayment penalty.
It always makes sense to consult an expert. The contract can be reviewed by a specialist lawyer or the consumer center, as they can determine the error in the cancellation policy and you can then demand the money back from an already paid and unlawfully demanded early repayment penalty from the bank.
What else should be considered?
Some steps should be taken to avoid untimely loan repayment, which can avoid the cost of prepayment penalty under the conditions already mentioned:
- Further information should be gathered from the documents of existing contracts. In particular, the residual debt still to be borne at the time of replacement should be taken into account in order to avoid further indebtedness.
- An audit of the financial market is recommended as it is possible to reschedule. This means replacing or replacing a loan with another loan to get a lower interest rate. Debt rescheduling is always appropriate when there is not enough equity to effect an early, early redemption of the loan.
- A specialist lawyer or insurance advisor should always be consulted. Whether a payment can be bypassed for prepayment, the experts can best recognize. If costs are incurred when consulting the experts, they can often be covered by an existing legal expenses insurance.
- There should always be several options in advance and the credit agreement to be scrutinized. In most cases, the bank also finds calculation errors in an estimated prepayment amount, which offers the option of avoiding them or keeping them very low.
It is also advantageous if the bank itself was already involved in similar cases where the borrower could avoid a prepayment penalty. Research on the Internet to the house bank in combination with the payment for prepayment penalty can be helpful.