Is it possible to pay off a loan before it reaches its natural contractual deadline? How does it work? How much does it cost? Let’s find out all the details in this dedicated guide.
Personal loan: is it possible to pay it off in advance?
Once the loan has been activated, it happens that the subscriber wants to proceed with the early termination of the quantum debeatur .
Thanks to this possibility, anyone with an ongoing loan contract can return the sum due in advance to the financing institution.
Specifically, the debtor must return the residual capital and interest accrued up to that time to the creditor.
However, before proceeding with the early termination of the loan agreement, it is a good idea to make two calculations in order to understand whether, indeed, it is appropriate or not.
It is necessary to check the statement of the situation of the loan that is sent to the domicile of the undersigned of the loan.
Thanks to this prospectus, updated at the expiry of each installment, each debtor may have a more complete picture possible to understand the amount of residual capital and interest that has yet to be paid to the creditor.
Early repayment of the loan: when is it convenient?
And then, once you have carefully examined the updated statement concerning the amount of capital and interest still to be paid to the credit institution, when is it really necessary to proceed with the early repayment of the loan?
In general, this solution is convenient if you are at the beginning of the loan repayment plan and you still have a lot of interest to pay, otherwise if you are more than half the loan repayment plan, it is not convenient at all.
In this second case, it is better to leave alone and continue to repay the loan installments according to the nature of the loan contract.
Early repayment of the loan: how much does it cost?
You are convinced to want to pay off the loan early, but how much does it cost ? In addition to the residual capital and accrued interest, you could take care of the repayment of the interest loss on the installments by applying a delay applied for the fact of extinguishing the loan in advance.
The compensation corresponds to:
- 0.5% of the amount repaid in advance if the residual life of the loan is equal to or less than 12 months,
- to 1% of the amount repaid in advance if the residual life of the loan is more than 12 months.