If a loan is terminated before the regular expiry date, a prepayment penalty must be paid.
This fee is payable by the borrower to the bank. It serves as compensation for the credit institution and comes into force if measures are taken early to dissolve the loan. This is usually the case for special repayments and rescheduling.
The prepayment penalty is payable whenever the loan is repaid early. Because every financing is tied to a contract and the end of the contract period is fixed.
If the amount is paid prematurely, the early repayment penalty comes into force. Only if it is expressly mentioned in the contract that no prepayment penalty has to be paid will the fee be waived.
It can also be done by the Bank a faulty cancellation policy, even in these cases no prepayment penalty is due.
However, the amount of the early repayment penalty is not regulated by law, so it is difficult for the consumer to verify. If there are discrepancies with the bank, usually a lawyer is called in.
With a construction loan there are special features
Frequently, the prepayment penalty is due on mortgage financing, since this is usually larger sums. In Germany, long-term fixed interest rates with an unchanged interest rate are quite common.
This is not the case in other European countries. For the consumer this means that the interest rate does not rise and gives the bank the assurance that the interest rate will not fall.
So both parties can plan well. If the borrower repays the mortgage amount prematurely, the bank loses a significant part of the profit.
To compensate, the prepayment penalty is then calculated. The amount of these payments determines the remaining term, the original interest rate and the current interest rate level.
However, the bank is not obliged to special repayment
However, the financial institution is not obliged to early repayment of the sum is always based on goodwill . The request of the borrower is not decisive here, the bank can insist on contract fulfillment.
However, the borrower has a special repayment right if the financed property must be sold. But here too the compensation is due.
However, if the fixed interest has expired after at least 10 years, a special repayment without prepayment penalty can be made. Every borrower should therefore inquire in advance, when a special repayment is possible and how high the prepayment penalty.
However, other types of financing can be obtained with a variable interest rate, this contract can be terminated after 3 months.
Here, too, a prepayment penalty will be charged, but for contracts concluded after June 11, 2010, the highest 1% of the remaining debt is allowed.
For contracts concluded before this date, however, there is no statutory regulation. If the remaining term of the loan is less than one year, 0.5% of the remaining debt will be due.
Prepayment Compensation for a debt restructuring
In a rescheduling is usually a costly loan replaced and replaced by a cheaper loan. The borrower thus has a significant saving of interest on the term.
Incidentally, this applies equally to building loans, as well as to all other loans. Unless otherwise expressly stated in the contract, the Bank may claim a prepayment penalty.
It is therefore always necessary to examine whether debt restructuring is worthwhile at all. So the sum of the old loan, including the compensation, must be compared to the new loan.
The difference then results in the savings. If a vehicle has been financed, of course, a prepayment penalty will be charged, but the rescheduling of an older auto loan is worthwhile in most cases.
However, if a processing fee has been charged for this loan because it is not reimbursable if the loan is terminated prematurely, the borrowing rate must therefore be used for the calculation because the fee is not included here.
The amount of the prepayment penalty:
There are basically two ways to calculate the prepayment date. Here the different species are a little bit more illuminated.
The bank expects to be able to lend the money it receives in the event of premature repayment to another customer. However, if the interest rate is now lower, the bank will incur a loss. Here, the interest difference between the two loans is taken into account, but a so-called interest margin damage is also calculated. Here, 0.5% of the loan is due, with other cost factors depending on the remaining term.
Asset Liability Method
In this case, the bank assumes that it can buy shares with the money and thus compensate for the interest loss. However, this method is usually beneficial for the bank, it therefore also represents the preferred formula. This method is also used in online computers.
Processing fee for a prepayment penalty
For the prepayment calculation, the bank may charge a fee. Processing fees for a loan, however, are not allowed. However, the fee must already be included in the prepayment penalty.
However, it is not regulated by law how high the fee may be. Sometimes different banks can charge up to 300 Euros.
Check the prepayment penalty
If the bank has communicated the amount for the prepayment penalty, it must be reviewed. Because often the sum is disproportionately high and the calculation is rather intransparent at many banks.
Before the prepayment penalty is paid, the amount should be reviewed by a financial expert. However, the bank will first block the objections, in most cases, a lawyer must be involved.
A detailed calculation
If the review is to take place later, the following points are important. What recalculation rate has the bank charged? The source and the interest should be clearly named.
Are saved administrative costs taken into account in favor of the borrower? What are the saved risk costs? Has it been considered that a later special repayment would be possible?
What is the bank processing fee? The bank must provide information on this. Whether the prepayment penalty is really too high, the layman usually can not determine.
A first assessment, however, offer the free computer on the Internet. Of course, the consumer centers or a financial institution can check the amount of prepayment penalty, but this is subject to a charge. The consumer centers usually charge 70 euros, financial service providers are significantly more expensive and charge about 200 euros .
If a professional opinion is available and it has been determined that the prepayment penalty is too high, the bank must correct the claim downwards.
If she does not do that, a lawyer has to be turned on. But you should also remember that a lawyer costs money, so you should ask before the legal expenses insurance, whether they take over the costs.
Attention: cancellation contract
If the bank doubts the correct repatriation of the sum, it often offers a cancellation contract. Here details of early repayment are precisely regulated.
If the repayment of the loan is initiated by another financial institution and the lending bank has not yet given notice, there is no entitlement to any compensation.
Unless the early repayment penalty is expressly regulated in the cancellation contract. It is therefore highly recommended not to sign a termination agreement recklessly ; nobody voluntarily accepts heavy burdens.
Our conclusion on the prepayment penalty :
A prepayment penalty does not have to be paid in any case, so you have to ask before the signature on the loan agreement, which information on prepayment penalty are included.
In some cases, the bank just does not have any claim to the prepayment penalty, but it is still gladly charged.
So you have to know the facts and the laws on prepayment penalty exactly and apply them. The layman can not do that, so it is always recommended to consult a financial expert .
He knows his way around and shares his knowledge. However, there is nothing in vain, even the expert will charge his costs. But here expertise is required and a layman usually has no chance.