Many loan agreements today offer the possibility to make special repayments. A special repayment that is made outside the normal rate either reduces the monthly installment or shortens the life of the loan. In any case, special repayments ensure that the loan costs are reduced overall, because the interest burden decreases.
Special repayments do not have to have notice periods, but often only once a year. For installment loans, borrowers usually have the opportunity to make a special repayment after only six months. In many cases, the special repayment must have a minimum amount, often three monthly installments. At the same time, with installment loans it is possible to repay the loan in full, with three months’ notice.
Even with mortgage lending agreements for special repayment are increasingly integrated into the loan agreement. Again, the special repayment often have a minimum amount, for example, 2,500 euros. Usually only a maximum of 5 – 10% of the loan amount, depending on the agreement, can be redeemed per year. The total amount of the special repayments may not exceed 50% during the repayment period.
Higher special repayments are usually excluded or tied to normal notice periods. Depending on the institution, special repayments can be made both with and without fees (prepayment penalties). If fees are calculated for this purpose, this can be found either in the loan agreement or in the condition lists of the banks. In order to be able to effect a special repayment, no written application to the bank is necessary. As a rule, the payment of the amount, specifying the loan number, is sufficient for a reference account designated by the bank.
In the case of installment loans, the special repayment may also be drawn directly from the checking account, however, it is necessary to inform the financing bank in advance of the amount and the date of the debit. However, special repayments should only be made if the financial latitude of the customer continues to be guaranteed. The rule of thumb is that you should only make a special repayment if you still have a cash reserve of about 2 to 3 months’ salary.