In many mortgage loan agreements, the cancellation policy is incorrect or incorrect. For you as a consumer, this means that you can avoid the prepayment penalty or reclaim the prepayment penalty you have already paid.
When consumers take out a loan, they may risk expensive prepayment penalties. “Redemption” in this context means the termination or complete repayment of the loan. The payment of the compensation can also be considered as a replacement.
A loan agreement is a mutually agreed contract between the borrower and the lender. If the installments, including interest, are paid as agreed until the end of the lease term, the loan agreement is considered terminated when the last payment is made to the lender. However, as banks often schedule loans for 5, 10, 20 or more years, a change in payment behavior may occur. As soon as installments are paid in arrears or are no longer paid at a certain point in time, the lender can remind the borrower.
In a nutshell: Information on the termination of the loan for fast readers
- A loan agreement must be terminated in writing to the lender. The latter must also confirm receipt of the cancellation in writing.
- Before borrowers drop out of their contract early, they should consider whether a prepayment penalty is payable. If this is the case, the question arises as to whether the termination of the contract pays off financially at all. The prepayment penalty calculator may be helpful in this issue.
- The prepayment penalty does not apply if the loan agreement has been in effect for 10 years or if the cancellation policy in the loan agreement was incorrect. Under certain circumstances, the prepayment penalty is also calculated incorrectly. Therefore, after the termination of their loan agreement, borrowers should in any case require a detailed calculation of their prepayment penalty.
- The termination of a loan agreement can also be made by the bank. The prepayment penalty may not be higher than 2.5% of the loan amount in this case.
- Anyone who has incorrectly paid the prepayment penalty can have it reimbursed.
Replacing credit: what are the consequences of a premature loan termination?
A loan is deemed to have been terminated if the lender has sent the borrower a written notice of the loan loan by post. In general, the loan termination is valid from a date specified in the letter. If the repayment is made by the borrower, the end of the loan term is assumed when the lender has confirmed receipt of the loan in writing. Make sure that you comply with the written procedure in the event of a credit transfer by you.
Which reasons can lead to a loan termination?
- The termination comes from the bank because the installments are no longer paid on time
- The borrower terminates the loan agreement because he refuses to pay the installment
- The borrower has found a cheaper loan offer from another bank, wants to take advantage of this and repay his existing installment loan
- The borrower has died
- The lender registers for bankruptcy and forwards all current loans and financial benefits to another bank
Cancel a loan: What should be considered if the loan is to be redeemed early?
To be able to terminate a loan agreement, you must first of all consider the time of the replacement. It does not help to pay off your credit before you have thought about the scope of your decision. Make sure you talk to your current or new lender before the termination date. If you have opted for a change of lender, prepare everything before submitting the contract termination so that you can already sign the ready-made loan agreement with the new contracting party at the end of your current credit agreement and receipt of the notice of termination.
If you would like to terminate the loan without follow-up financing or without debt rescheduling, you should consider the terms of payment of the prepayment penalty before you replace the loan. Contact your accountant for assistance or have an appointment with the Consumer Department. It is important that you decide before loan termination, how you will finance the prepayment penalty.
When must the prepayment penalty be paid?
The early repayment penalty usually has to be paid whenever loans are terminated or rescheduled before the end of the agreed term. Because of this, the bank escapes fixed income through interest, but with which the bank has expected. Accordingly, a discontinuation of the prepayment date can not be assumed from the outset. Any borrower who is considering a loan termination must expect to pay the early repayment penalty in the event of early loan repayment. The exact time at which the money for the prepayment has to be paid is determined by the current lender.
If you have other accounts with the same financier and you are using additional financial benefits, your current lender may ask for a later or longer repayment of the prepayment date. Also at this point it is important that you decide and know what you want and can realistically achieve financially. With a loan termination with not inconsiderable follow-up costs, it is important to continue to maintain confidence and to encourage by a positive payment behavior.
In which cases does the prepayment not have to be paid?
The prepayment date does not apply if loans have reached the term of 10 years. Borrowers then have the right to terminate their installment loan with their respective banks, to seek retraining, or to seek new follow- on financing without the banks being allowed to charge the prepayment penalty. However, very few borrowers are aware of this possibility.
Experience has shown that the lending banks do not follow this rule on their own initiative and do not draw the attention of the borrower. So it is up to you to report to your bank, if they charge you the prepayment in breach of law and now demands the appropriate money.
These and other information can be quickly reviewed and explained by a specialist lawyer for capital law. Call a specialist lawyer for capital law and describe your specific case. Time and again it turns out that every case is unique and does not replace credit immediately.
Replacing a loan without a prepayment due to incorrect cancellation policy
In addition to the 10-year rule, there are more and more cases that have a faulty cancellation policy to the object. According to a nationwide court order, a faulty cancellation policy in contract law leads to the cessation of the so-called contractual penalty, and thus also to the demand for early repayment penalty. In the case of a faulty cancellation policy, credit repayment or repayment is possible at any time without prepayment penalty.
Simply hand in your loan agreement to a specialist lawyer for capital law or to the Consumer Center and have the section of the cancellation policy checked for accuracy. If you want to go ahead and save on the average for the check 70 EUR, look for the valid at the time of the loan conclusion cancellation policy and compare the two revocation instructions exactly together.
Announce Credit: But how?
Write an informal letter and name the loan contract, the number of the loan contract and all borrowers with their first name, surname and date of birth. Add the date on which you want to terminate the loan agreement and make sure that the termination is signed by all borrowers. You need not give a reason why you want to terminate the loan agreement.
Formally, termination is accepted as soon as you receive feedback from the lender that the termination occurs at the specified time.
These steps must be followed before you replace a loan early
Before you replace your loan, you should think about it. A loan termination should finally be considered. How should it continue, how should the early payment be paid? Is there sufficient time to submit the calculation of the early payment to the specialist lawyer and have it checked for accuracy? Do you have a legal protection insurance or capital to settle any problems between your credit bank and you about consumer protection or a specialist lawyer for capital law? Questions that need to be considered ahead of the decision to replace a loan early, well thought out and answered. Even if the loan cancellation proves to be straightforward, get support before the submission of the notice consumer protection or the specialist lawyer for capital law. Sufficient cases have become known in which the maturity was significantly excessive or due to a faulty cancellation policy should not have been made.
Replacing credit from the perspective of the lawyer
With the help of a specialist lawyer, the course of a loan termination by experience and the right tone can go well. Anyone who wants to replace a loan prematurely, according to experience, comes too fast to his emotional and physical limits as soon as the calculation of the early maturity is delivered or a rescheduling is not approved by the current lender. In order to save money and nerves, the desire to want to replace a loan prematurely, can be delivered directly to a specialist lawyer. Save your strength and use it to better understand your own financial situation and make future-oriented, realistic assessments.
Make an initial consultation with a specialist lawyer for capital law as soon as you know that you want to repay your loan early. Use the advice of a lawyer, experience with loan agreements, and know how to make a loan termination as cost-effective as possible. With a specialist solicitor, you have a strong and secure partner at your side who can help you with your interests and relieve you of research and stressful situations between you and your lender. A good specialist lawyer will work for you to the extent that the prepayment date is lower, eliminated, or you will receive much better terms on an optional new loan or the use of a financial service.
That happens when you cancel the loan agreement
Upon receipt of the notice of termination, you will receive the confirmation of the termination from the lender. This will tell you the exact time of the end of the loan agreement and the date on which you can replace your existing loan with. Either this letter already contains the amount of the prepayment date or it will be sent to you in a follow-up letter.
Once you have the amount of the prepayment penalty in front of you, you should see if the prepayment date is accompanied by a calculation. If this is not the case, request the prepayment penalty calculation as soon as possible from the lender. The time is running, because with the delivery of the prepayment date you come into the payment obligation.
In no case do you pay the amount of the prepayment until the prepayment penalty calculation has been fully reviewed. If your bank has miscalculated, it will be more difficult and above all take a long time to get the overpaid amount refunded.
If you have the prepayment penalty calculation in front of you and you can not fully understand the calculation method, then seek the help of a capital lawyer. Even if the rough calculation steps are correct, excessive processing fees or completion fees can lead to a faulty prepayment calculation. These mistakes can not be detected with the knowledge of a layman. For this reason, any prepayment claim should be reviewed by a specialist solicitor before payment.
To replace a loan, you should therefore take a lawyer specializing in any case, if only to let examine the calculation of the compensation for early termination of the loan by trained, experienced eye. As an alternative to the specialist lawyer, you can ask the Consumer Protection Center to review your loan agreement and check the prepayment calculation. This service is usually charged at a rate of about 70 EUR.
Announce credit agreement: Is this worthwhile in case of a very high prepayment date?
If you would like to repay your loan and the termination of the loan contract therefore comes from you, you should ask this question for the advantages and disadvantages termination or rescheduling of your loan seriously and answer honestly.
- For what reasons would you like to terminate the loan agreement?
- Are you ready and can you currently afford to pay the possibly incurred sum of the prepayment penalty?
Borrowers opting for rescheduling and thus for another lender will be able to make this question much more flexible than borrowers who want to replace a loan without taking on a new one. Here, for example, the forced sale of a house, the separation from a community and the associated desire for a new beginning, the background.
Borrowers who want to repay an installment loan prematurely for these reasons, therefore, have a more difficult decision to make. While borrowers with rescheduling ambitions can, in the best case, replace the prepayment date with the amount of the new loan amount, borrowers without a new loan agreement need to think carefully about how the prepayment date should be paid. From the point of view of that borrower it is not worthwhile to terminate an existing loan agreement at any time.
Termination by the bank and excessive prepayment receivable
It is not uncommon for a credit bank to terminate the financial relationship once the installments have not been paid repeatedly. Despite the self-pronounced termination by the lender, the claim to the claim of the prepayment penalty on termination of the loan remains. A situation that may seem paradoxical to many borrowers at first glance. In its ruling of 15 January 2013, Federal Supreme Court, Federal Court of Justice XI ZR512 / 11, the legislature of the lending bank declines to take a prepayment interest higher than 2.5% above the underlying. If the area of the prepayment calculation is still relatively unregulated, the Federal Government, with decisions such as these, is increasingly taking a stand on clear and fair dealings with the borrower.
On the occasion of this ruling, prepayment penalties already paid may be re-examined and officially repossessed by the borrower. An informal request for the repayment of an overpayment of the prepayment penalty must be made directly to the respective bank. Whether you are also one of the borrowers to whom you are entitled to recovery, you can simply establish by giving your loan agreement and writing the prepayment penalty to a specialist solicitor. This examines your case and can probably already tell you in the first interview whether you have the right to reverse payment and in what amount this amount. At the latest here it turns out that a payment of the early repayment penalty in the case of early loan can be prevented without examining the calculation of a reversal and associated follow-up costs by commissioning a specialist lawyer or the non-availability of a usually four- to five-figure sum.
How can a loan termination be avoided for the time being?
As with almost all financial matters, creditors engage in the debtor as long as there is a willingness to talk. The willingness to talk shows up especially if the borrower contacts the creditor early on, as soon as there are problems with compliance with the installment payment. This built on respect and transparency customer relationship actually be pronounced a notice can be delayed.
With a bit of luck, the delay and the good will of the lender will last until you are back on safe financial footing and can resume the installment. If there is a temporary prevention of payment as the reason for a loan termination, you should talk to the lender about a smaller installment or temporary installment break.
An installment break, however, has its price in the long run. Thus, the loan term is extended by the time of the installment break. In addition, the amount of the loan is calculated in the period of payment installments with higher maturity interest. The installment break is therefore only an option for a temporary insolvency, which is actually finite with consent to the installment break.
Conclusion 1: Replacing credit is a case decision
Experience so far shows that credit termination tends to be complex. The conversation with the bank is always beneficial, as long as you keep the good tone. If you feel misunderstood in your wishes or if the bank comes with clearly inflated demands on your part, you should not get involved in a blow-out. As soon as you realize that you are acting rather emotionally and objectively, you hand the further communication on to the specialist lawyer for capital law. Even before concluding a loan, you should have thought about and made the possible developments. To protect yourself from falling into a crisis should you lose your job or become seriously ill over the course of 10, 20 or 30 years.
Conclusion 2: First inform and then terminate the loan agreement
A termination out of the gut, because another lender offers better conditions, rarely leads to a good end. First of all, bear in mind that you want to replace your loan early and seek competent advice, for example in the form of a specialist lawyer for capital law. Do not rush the decision and rethink all the consequences of your loan termination. Above all, it has to be weighed whether the prepayment penalty is actually in positive relation to the planned savings in interest at the conclusion of a loan with lower interest rates. Consult with acquaintances and work colleagues how they deal with their loan agreements or handled. Often these conversations can be an important support in order to recognize for themselves what the best course of action is.
Conclusion 3: Canceling a loan agreement does not mean the end of the world
The heavy burden of terminating the loans often causes the borrowers to not recognize a significantly overdue as such and to pay the amount prematurely. Take the pressure out and have the terminated loan agreement, including the prepayment penalty calculation, reviewed by a specialist attorney for capital law. Inquire in advance with your legal expenses insurance, which benefits are paid in which amount by your insurance. Depending on the case, this request can also be made by the consumer protection or the specialist lawyer himself.
Conclusion 4: A prepayment penalty on loan termination does not have to be
Even if the claim of prepayment is usually made, the experience shows that the legally binding claim of the prepayment penalty has to be proven after the loan has been repaid.
More and more cases emerge in which the prepayment date has been overcharged or due to a faulty cancellation policy is not legal. To ensure that you are on the safe side and do not unjustifiably pay the lender money for the prepayment, contact a specialist lawyer or consumer protection and have the loan agreement and the prepayment calculation checked.
Conclusion 5: Learning from others
You want to replace your loan early before the actual end of your loan agreement? Then take a moment and start your research. Look for your lender and on early repayment or termination and find out if your lender is known to overdue.
Take advantage of the opportunity to contact the specialist lawyer for capital law. Present your documents and use the free initial consultation. You will receive an assessment of your situation and will then know what will happen to you in the event of a premature termination of the loan. Take advantage of the opportunity and gain an overview of the situation before becoming acute and create options for action.
To get an overview of the amount of prepayment penalty that may be payable, you can also use the prepayment calculator. Using the prepayment calculator, you can immediately determine what the prepayment date would be by specifying your loan conditions.
Conclusion 6: Applying for loans – looking ahead is better than looking back
If a loan cancellation is imminent, quick action is often required. Be realistic and value your current time and performance resources. Do you have the time and the nerves to go looking for a new lender to replace your existing loan? Can and do you want to deal directly with your current lender? If you answer no to one or more of these questions, contact the specialist lawyer. He can assist you with competence and will help you to get out of this situation as stress-free and cost-effective as possible.