It is possible for anyone in debt to settle the outstanding capital of their credit without necessarily waiting for the term. Indeed, when you borrow, for example, a sum of money, you agree to regularly pay monthly payments for a period specified in advance in the same way as the amount of monthly payments which you will have to pay.
That said, it is now possible to settle the amounts that remain to be repaid without necessarily waiting for the term of your credit. However, prepayment is not always a good idea, contrary to what you might think at first.
Should a full or partial reimbursement be provided in the case of an early repayment?
It is entirely possible to repay only part of your loan. For example, let’s say you just received $ 30,000 through an inheritance. You will then be able to spend this amount to reduce the duration of your loan as well as the deadlines.
That said, you must take care to consult the conditions of your loan in advance. In certain cases, you may come across creditors who will refuse you outright this operation in case the amount paid does not exceed 10% compared to the initial amount of the credit.
When can prepayment become attractive?
For a person who has taken out a revolving credit, as soon as his finances allow him, he should make a total or even partial repayment of this loan, since this kind of credit never ends with interest rates. the exorbitant interest of around 20%! Regarding other types of contracts, the decision will not be quite the same. Everything will depend, in fact, on the type of contract that governs the repayment of your credit.
In general, the first years of a mortgage are those where early repayment is the most attractive. And for good reason, most of the deadlines report to the repayment of interest, while at the end of the loan, it is rather the capital which is reimbursed.
Are there any fees for early repayment of a loan?
If the prepayment relates to a loan with a variable rate or to a consumer loan, there are no costs to be expected.
Likewise, concerning the case of a loan with capped rates, knowing that these are applied rates which can increase up to a certain ceiling where they will remain fixed, as long as the cost of the loan has not yet reached this ceiling, repaying your credit before its end will not incur any additional costs.
On the other hand, when the rate has reached this limit, and will, therefore, have stabilized, a sum will have to be paid, the amount of which will be equivalent to 3% of the capital remaining due. This amount remains negotiable with your creditor.