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Early termination – beware of high costs

Summary

The early termination of a loan is possible at many banks, but the costs usually increase for you. In individual cases, you should therefore clarify exactly what options there are for early termination of the loan before signing the contract. […]

The early termination of a loan is possible at many banks, but the costs usually increase for you. In individual cases, you should therefore clarify exactly what options there are for early termination of the loan before signing the contract. Otherwise, in practice, you will have to pay significantly more afterwards than if you continued to pay off the loan.

Early termination has its pitfalls

As a rule, the topic of early termination of a loan only becomes topical after some time. While in the beginning the feeling of happiness over the available money predominates, in later times disillusionment can set in. If the financial framework improves significantly, you are usually interested in removing such a legacy. Then it must be clarified how an early termination is possible. While many financial institutions insisted on their contract law in the past, banks are much more flexible today. However, this does not necessarily mean that there will also be an advantage for you. (Replace installment loan: It can be worthwhile)

High costs for you as a customer

By repaying funds early, the lender misses out on interest income. Therefore, in the event of early termination, a compensation amount will be charged. Studies have shown that many institutes receive too high sums in this area. When calculating, the customer is usually neither informed about the special repayment nor about reduced risk costs.

Bear in mind that by making an early repayment, the bank no longer bears the risk of not receiving the borrowed money later. This advantage is usually completely disregarded in the event of an early termination. Unfortunately, it is difficult to see through in individual cases on which basis the calculation of the compensation amount was carried out. (How to cancel an installment loan)