Did you win less in the lottery or were you surprised by a thicker envelope at work? There are a number of reasons why you might want to consider doing a few monthly repayments on your credit debt! When you repay your loan, you have the opportunity to prepay, that is, to pay off several monthly installments at a time. Generally speaking, a borrower pays a minimum of 3 monthly installments in advance.
Often banks charge a prepayment fee for this, though fortunately, there are several free offers. Because you may encounter different fees from financial institutions, and these costs are quite different for each type of loan, it is a good idea to look at early repayment fees when borrowing, and a loan calculator can help. Comparison is thus quick and easy, and you don’t have to go to a bank to do it in front of your computer.
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Prepayment rules have changed a lot in recent years. Under current regulations, the borrower can always exercise his right to early repayment.
After the prepayment, the bank will reduce the total cost of the loan in proportion to the prepaid amount, plus interest at the original maturity and other costs. The bank may charge a prepayment fee if the prepayment is for a period when the interest rate is fixed. The prepayment fee is as follows, from the date of the prepayment to the date of expiry of the loan agreement:
This is how you can float the prepayment fee
The bank may not charge a prepayment fee when a credit agreement is linked to a payment account, and the prepayment is free of charge even if someone is prepaying under an insurance contract as a repayment guarantee. You won’t be able to charge any of these fees even if your one-off prepayment is less than $ 200 in any one year.
The central bank has strictly regulated the prepayment fee for new housing loan products with a Qualified Consumer Friendly Home Loan Recommendation. If you wish to prepay for such a loan, the fee may not exceed one percent of the prepaid amount. What’s more, if you want to repay a loan taken with your home savings, it is completely free of charge. So it is worth considering such a loan when looking for financing to buy a home.
Does everyone do the same?
The prepayment fee is calculated by the banks on the basis of the prepayment amount, which is the same for all banks listed below. Similarly, for each offer, the prepayment fees are the same: they are always payable on the prepayment occasions, there are several times for a partial prepayment, so we pay the fee as many times as we prepay.
As a general rule, the prepayment fee does not exceed the amount of the loan interest payable for the period between the date of the prepayment and the original date of maturity of the loan, so in fact the prepayment fee “compensates” the banks for the lost interest. As an exception, the table below shows cases where prepayment fees and conditions are different.