Replacing credit early – costs
If I want to repay or repay a loan early, what about the prepayment penalty?
Loose credit prematurely and finally be debt free
Whether it makes sense to premature a loan depends on several factors. On the one hand, these are the circumstances in which the borrower is located and, on the other, the general level of interest that currently prevails on the financial market.
If borrowers redeem long-term loans, it may make sense to prematurely repay these loans when interest rates are currently significantly lower. Whenever interest rates can be saved by repaying the loans, an early replacement must be sought.
Replacing credit for house financing prematurely
A replacement of mortgage loans usually only makes sense if the fixed interest period is over. Anyone who has previously canceled his loan must pay the bank a prepayment penalty for the lost interest losses. If this is higher or the same as the money, which can be saved by lower interest rates, it is less advantageous to replace the loan beforehand. This is true even if no new loan would have to be taken.
If the fixed interest period has elapsed, it is certainly worthwhile to replace the loan prematurely, because this will save on borrowing costs for follow-up financing. Borrowers should seek bids from other banks in order to have better opportunities to compare interest rates.
Financial experts recommend that the follow-up financing be sought by a new lender who offers better conditions for the follow-up loan. Alternatively, borrowers can also negotiate with the lender by presenting cheaper offers from other banks. Often it is possible then to get better terms with the previous financier.
Expensive credit Umschulden in the low interest phase
Not only with the financing of a house, the premature detachment can make sense. Other loan commitments are also under scrutiny in the low-interest phase. Currently, the interest rates are so low that can save a lot of money by early replacement, even if the bank charges processing fees. If the loan terms of the new loan provider are better than the old one and you have multiple debts at the same time, it may be worthwhile reposting the loans.
Replace loans prematurely if it is financially tight
Occasionally borrowers may prematurely repay existing loans because they are too heavy on a monthly basis. This is the case, for example, when financial conditions have changed negatively. The aim of the early redemption is to reduce the monthly burden with a new loan with a longer term. It is unimportant for the borrowers whether they save money or incur additional costs. The main thing the installments are affordable.
Pay attention to the cost of the prepayment penalty and other fees (processing fees)
In the case of premature termination of installment loans, there is no statutory financial compensation obligation in the form of prepayment penalty. Nevertheless, some banks have clauses in the terms of the loan, which also provide for the payment of such compensation in the case of an installment loan. The early repayment penalty may not be demanded if borrowers use their statutory right of termination.
Other banks do not require prepayment penalties, but charge borrowers fees. About this processing fee, the banks claim their additional expenses.
Current loan conditions for your mortgage lending can be requested here free of charge and without any restrictions.
Replace the loan early? Then compare loan providers with a loan calculator
If you want to terminate a loan without notice, you should do a credit comparison with a loan calculator.
What experiences did you have when you wanted to repay a loan early?