Early loan repayment: 8 things you need to know

2024 Author: Malcolm Clapton | [email protected]. Last modified: 2023-12-17 03:44

Important information for those looking to save on interest.

1. The bank cannot prohibit you from repaying the loan ahead of schedule

If you take out a loan not for business purposes, then according to the law you can always repay it ahead of schedule - in whole or in part. There is only one but. The bank must be notified of the deposit of money at least 30 days in advance. However, a credit institution can shorten this period. The exact details will be indicated in your loan agreement.

Now large banks accept applications for the introduction of ahead of schedule via the Internet, and the payment is taken into account almost immediately. This is an important condition in the competitive struggle, as people pay attention to the opportunity to pay off debts ahead of time. But some institutions still want to receive applications on paper. It is better to find out about this before you take out a loan.

Please note: you must notify the bank, not ask for permission. The main thing is to meet the deadlines. So they can't refuse you.

2. Additional payment for early repayment of the loan should not be taken

The bank can only charge a fee for the provision of independent services. They are considered actions due to which the client receives an additional beneficial effect. Loan repayment - early or not - is simply an inevitable operation under the loan agreement.

And even more so, we cannot talk about fines. The law allows you to repay the debt ahead of schedule. So you just follow the norms of the Civil Code, you have nothing to be fined for. If you are faced with bank arbitrariness and paid extra, go to court.

But here it is important to remember the nuances. For example, if the loan agreement states that you need to notify about 15 days ahead of schedule, and you certainly want to deposit money today, this may already become an additional service. The bank, on the other hand, meets you halfway: it performs an operation outside the contract. They can take a commission for this.

All this is true if you are not taking out a loan for entrepreneurial activity. Otherwise, the situation is somewhat more complicated, and you will have to analyze each case separately.

3. Notification must be sent

Usually, you just need to indicate the amount and date of debiting in a special column in the mobile bank. A simple action, but a lot depends on it.

Let's say you decided to repay the loan in full ahead of schedule, calculated everything and put the required amount on the credit account. But they did not take any additional actions, hoping that everything was obvious: the money would be withdrawn and the loan would be closed. How everything will turn out in practice: the system will automatically pick up the amount of the monthly payment on a schedule. And then it will not be enough, because you counted the money taking into account early repayment, and you will be charged with delays, which is fraught with trouble.

You can do without notification only if you repaid the loan within 14 days from the date of receipt of the money or 30 days if the loan was targeted.

4. The bank is obliged to recalculate the full cost of the loan

If you have deposited part of the money ahead of schedule, the institution must recalculate the full cost of the loan for you. In the document, you can see what has changed: the amount of the overpayment, the term or the amount of the monthly payment. In addition, an updated schedule will be sent to you if it was previously issued to you.

5. It is better to regularly repay the loan early in small amounts than to accumulate a large installment

Let's look at an example. You owe the bank 185 thousand, there is still 1 year and 10 months of payments at 15% per annum ahead. In the next six months, you can either deposit 6, 16, 8, 2, 5 and 4 thousand rubles in succession, or after six months, pay 41 thousand rubles at once.

In the first case, your debt after six months will be 97.7 thousand, overpayment - 23.6 thousand. In the second - 98, 85 thousand and 25 thousand, respectively. At a longer distance or with more significant amounts, the difference will be more convincing, but the meaning is clear.

6. It is not always worth depositing money as soon as it appears

This point does not contradict the previous one. Some banks are ready to write off the money that you deposit into the early payment account on the day it is credited. But first they calculate how much interest has run over the balance of the debt from the moment of the last monthly installment to the present day. After that, this amount is subtracted from the one that you transferred. As a result, the amount of early maturity turns out to be less than you expected. And sometimes it is not considered at all as an early deposit of money.

Let's say you owe the bank 200 thousand rubles. Your monthly payment is 6,933 rubles, it is scheduled for February 14th. You have an extra 1,000, you deposit it on January 29th. Logically, your debt should be reduced to 199 thousand. In fact, the early term will simply be taken into account in the account of interest repayment. At the same time, the monthly payment on February 14 will decrease to 5,993 rubles, but this is not what you wanted.

If your bank operates according to such a scheme, it is more profitable for you to make an early payment on the day of the mandatory payment.

7. It is important to calculate the pre-term correctly

If your bank takes into account an early payment on the day of the monthly, there are also nuances here. It is important to have the correct amount in your account. Let's say the conditions are the same, you pay 6,933 rubles. We decided to contribute 10 thousand more ahead of schedule and wrote a corresponding application. But on the right day, only 16,930 rubles were on the account. The system will first remove the required payment. And then he will not be able to do anything, because there is no specified amount on the account: 3 rubles are not enough. As a result, the premature simply will not pass.

8. It is more profitable to renew the insurance for long-term loans every year

Sometimes loan recipients are offered to take out insurance at once for its entire term. They promise favorable conditions, and you won't have to remember the policy every year. However, if you pay off the loan ahead of schedule, the benefit looks dubious.

When you take out insurance annually, it is calculated based on the actual loan balance. If you do this at once for the entire period - from the expected in accordance with the repayment schedule. The difference can be dramatic. In addition, if you repay the debt a year early, it turns out that you overpaid at least 12 months.

From September 1, 2020, the excess paid for insurance in case of early repayment can be returned. But this only applies to contracts concluded after this date.

And one more point, not related to early terms. When insurance really works, rather than ticking off, it should take into account your health condition. For example, for the simplest policy, payments may be refused if you have a chronic illness - the conditions will be spelled out in the contract. Two years later, the loan is revealed to you - it turns out that you will not see insurance payments. The annual policy update makes it possible to take this nuance into account.