When you inhale credit, we often think to repay it as soon as possible. We can do it before the deadline for repayment. However, if we are always worth it? It all depends on what type of credit agreement we entered into, what it records, as well as important details contained in the regulations.
One of the most popular financial products is consumer credit. It can be financed, among others, daily expenses, buying a washing machine or TV. The amount of this loan does not exceed 255 550 zł, or an equivalent amount in foreign currency. The decision whether to repay the cash advance loan, depends on us. Each borrower should calculate the benefits and potential losses that could result in such a decision. It should be noted that the consumer credit agreements concluded before 18 December 2011, the provisions in force at the date of the agreement (Act of 20 July 2001 on consumer credit). In contrast, 18 December 2011, a new Act in the case of consumer credit. According to its provisions, the borrower is entitled to repayment of the whole or part of the loan before the date specified in the contract. In other words, the consumer has the right at any time to repay all or part of the loan before the repayment date. The lender can not make early repayment of being informed of this fact by the consumer. Financial institutions, as determined by the event will be able to get compensation for early repayment of the loan taken, however, of no more than 1% of the amount repaid prematurely.
Fee for repayment of the loan may not exceed:
- 1% of the loan repaid early, if the period between the date of repayment of the loan and the repayment date (end) the loan exceeds one year;
- 0.5% of the amount of credit repaid early, if the period between the date of repayment of the loan and the repayment period of the loan (final) does not exceed one year.
The amendment will not, however, apply to all loans, only loans with a fixed interest rate, and only when repaid before maturity exceeds 12 months specified value (in Poland - three times the average salary in the enterprise sector by the Central Statistical Office).
In the case of repayment of the entire loan before the date specified in the contract, the total cost of the loan is reduced by these costs, which relate to the period by which shortened the duration of the contract, even if the consumer has suffered them before the repayment. If we make an early repayment obligations, bank or other institution has 14 days to settle up with the borrower - it's worth it to make sure. Early repayment of part or all of the loan may allow you to save a lot of money on interest loan, but we have to convert well, whether it is profitable for us.
In the case of a loan in foreign currency - mostly mortgage to buy a house or apartment - against early repayment of the loan speaks situation where the current exchange rate is high relative to gold. In this situation, early repayment will bring us benefits. The loan rate most profitable to pay off earlier when the exchange rate is low and records of the contract does not cause a significant additional cost.
Remember, early loan repayments also affects the possibility of saving. Accelerated repayment of the loan at the same time reduce the amount of the liability for unpaid interest, so in this case it may be beneficial to us. When the interest on your loan is extremely low and if we have savings, you should also consider the possibility of investing surplus that przeznaczylibyśmy for early repayment of the loan and invest it in place or other financial product such as: investment fund, perhaps gain more. An important condition to repay the earlier loan is when the interest on your loan is very high. Then we should consider whether it is worth to get rid of previously expensive product.
Let us remember that there are different variants, we can make a partial payment, the total repayment of loans or repay the loan in accordance with the deadline set in the agreement. Therefore, let us read the agreement, lending regulations and a table of fees and commissions, and then us take the decision.