Probably anyone who takes out a long-term loan , mentally also with the possibility to replace it prematurely if necessary. Be it in the form of a special payment from the employment relationship or through a tax refund. As soon as more money is available , the monthly installment or the term of the loan can be shortened. At best, even the whole loan can be redeemed early and you are again “debt free”. Now you should think that not only the borrower has an advantage, but also the bank is pleased about the early repayment of the loan. But far from it, because the bank is the rather critical. The reason for this is that although the bank recovers the borrowed money sooner than expected, the expected interest income also fails. To compensate for this default, the bank uses an “instrument” that means ” early maturity decision “
Explode the cost of the prepayment decision on credit
If you want to redeem your loan early before the end of the agreed repayment period, you run the risk of having to compensate the bank for the lost interest income . It does not have to be this way in general, nor does it always have to be in a generally valid percentage. However, the Stiftung Warentest found out in the latest issue of Finanztest (11/2016) that the cost of the prepayment penalty has increased steadily in recent years . To illustrate this increase, let us take as an example of this increase a high-volume loan such as the real estate loan. Should be in the year 2008 a loan of 200,000 euros with ten-year fixed interest For a repayment after five years in the year 2008, only 2,000 euros prepayment penalty will be paid, the bank would ask for current fees a whopping 32,000 euros. An increase of the “penalty fee” within only 8 years by 30,000 euros! Such an increase is particularly problematic for those people who need to sell their house for financial reasons, to stay with the example of real estate. After the loan has been repaid, the high prepayment penalty leaves significantly less money, for example, to service open claims from creditors.
Conclusion: what should be considered in the prepayment penalty?
According to Stiftung Warentest, banks often charge the amount of the prepayment penalty to the detriment of the borrower. Because banks can drive the prepayment penalty through various measures in the air . For example, if the billing period is not correct, but the charges are calculated before the date of repayment, then bank customers may suffer if interest rates have fallen in the meantime. There are also certain elements of the contract that can even reduce the repayment fees. These include, for example, the ability to make special repayments or increase the repayment installment . According to a ruling of the Federal Court of Justice (Ref .: XI ZR 388/14), the banks are also obliged to settle such contractually guaranteed options as if the borrower had used them.
Especially if the bank calls for a very high prepayment penalty, you should check as a borrower whether these contractual clauses were even considered. After all, the higher the loan amount and the sooner the loan is triggered, the higher the prepayment penalty and also the risk that more costs will be incurred than are actually necessary .