If the bank terminates a loan, it will undoubtedly be a disaster for the borrower with serious consequences. If the conditions are met, each bank not only has the option, but also the right to terminate a loan or a loan before the end of the regular term. And that is when the repayment or repayment of the bank loan, including the utilization of collateral, is at risk. From the point of view of the bank, this impression is consolidated when the financial circumstances of the borrower or the value of the collateral have deteriorated significantly or are threatening to worsen. If this happens, the bank can extraordinarily terminate an effectively incurred bank loan pursuant to § 490 para. 1 BGB. This termination can also take place without notice, so that a short-term solution of the loan agreement can be made when typical risks occur.
Basics of credit termination by the bank
Termination of the loan therefore always threatens when, as a borrower, you have grossly neglected your payment obligations and fallen into arrears with at least two complete monthly repayment installments. Prerequisite for a termination of the loan without notice, however, is that the bank has informed in writing of the imminent termination of the loan by appropriate reminders. In addition, the Bank must grant the credit customer a sufficient period for the repayment of the loan liabilities with a reminder. If, however, this period for the repayment of the credit installments has expired without success and the borrower is generally closed to the bank, the bank has the unrestricted possibility of terminating the loan without notice. The consequence would also be that the loan balance still outstanding at the time of termination would be due in one amount. However, the borrower only has to repay to a lesser extent, and only the loan amount at the time of the effective termination, but without the future, pre-calculated interest and without maturity-dependent costs, which includes any discount. One-time, non-recurrent costs are not taken into account (§ 498 (2) BGB). In addition, in the case of a loan termination, the bank must submit a staggered settlement with exact mathematical calculation.
Termination of the loan is a heavy burden on SCHUFA
A loan termination is therefore a serious event, which in any case would result in a serious negative entry in the Schufa. For this reason, borrowers who, for whatever reason, face serious payment difficulties should seek to talk to the bank as soon as possible and try to reach an amicable solution. Experience shows that in this way a termination of the loan by the bank can be avoided. In particular, in the case of unforeseen unemployment or a significant reduction in monthly income, it is possible to reduce or temporarily suspend the monthly repayment installments and maintain this procedure until the borrower’s financial situation has improved significantly.
Right of termination applies to any form of credit
Basically, the right of termination of the bank applies in the cases mentioned for each type of loan so also for the discretionary loan as well as for a real estate loan. In particular, in the case of real estate credit, one should seek the dialogue with the bank when recognizing possible payment difficulties, since in such cases, the financed property has often been left to the bank as collateral. If the arrears persist, the bank would have direct access to the property and could immediately put it up for auction. So far, it should come in no case!