Credit transactions: penalty interest for quick payers

Iron Save does not pay off in any case. It is expensive to repay a loan early. Banks then charge high penalty interest. A law change that soon. But it does not apply to real estate loans.

E series Save does not pay off in any case. Sometimes it is even punished. Or so it seems to those who have taken out a loan and want to pay it back early. Then, namely, the banks often threaten with penalty interest, the prepayment penalty. Which often gives rise to the dispute, because it is so high and impenetrable.

The prepayment penalty is payable whenever a borrower has secured a long-term loan at a fixed interest rate – and if he wants to get out again early in the contract. With the fixed interest income from the lending that is also the bank expects. Solves the customer so early the loan off because he has come otherwise money, the bank requires compensation that he missed more revenue. Because of the interest that once enough a bank for a loan, for example, 100,000 euros, she deserves better than the fact that they can create the 100,000 euro itself again.

The financial question: the confusion of return and yield

In determining the compensation, many banks proposed in the past but often charge too. They also did not disclose how they got to the often astronomical sums. So few customers to assess whether the amount of the prepayment penalty, first, appropriate and whether it is second, in view of this sum is actually worthwhile to pay off a loan early. Or whether they should not let him but continue to run and apply for the available money as long as low-interest rates.

Many home buyers stuck to the dilemma. Especially those who bought a house and it is ensured a long-term interest rate. but repelled about because of a job change their property prematurely again. Or have a loan because of their iron discipline savings or unexpected inheritance prematurely can pay off.

Time and again, courts employed in such cases, with the amount of prepayment penalty. Lastly, the Federal Court made a decision in favor of the consumers: To determine how high the penalty interest rate, the bank can not compare what they in the same period – deserved public debt – low yielding. But it must offset the precipitating lending rates with the revenue that it could obtain from much higher-yielding mortgage bonds. Thus, the penalty interest for customers is lower. A positive signal.

Another saw many financial experts in the new law, which brought the federal government in July at the direction of the EU on the way: The Consumer Credit Directive deckelt the amount of the prepayment penalty of 2,010 to a maximum of one percent of the loan amount – but, and this is the major limitation here the policy applies only to loans that are not secured by mortgages. So it concerns only large consumer loans, but no construction or real estate loans. So you apply more than in the cases where customers have received a lot of money for renovations.