What Is an Early Repayment of the Loan?

Often, it is hard enough to find the full amount at once to close the debts to the bank for those who borrow money. However, it may happen that suddenly there is a large amount that can be sent to pay off the debt. Is there such a thing? You can get an inheritance, win a lottery, earn, and so on. What does a borrower usually do under these conditions? Goes to the checkout, pays several payments at once! It would seem that nothing can prevent such a simple procedure? But in fact, it turns out that everything is not as simple as it seemed.

Why Is Early Repayment of the Loan Problematic?

If some partners do not take into account the conditions of possible payment in advance, then others are very scrupulous about this moment, trying as much as possible to delay the process of paying the entire amount for longer. Why? Because so many financial partners are simply unprofitable, they lose a certain percentage, which they could receive with each financial transaction carried out through the checkout. So what does it mean to pay off the debt agreement in advance and why are there so many disputes around this topic?

Early repayment of a loan is a deposit of a certain amount for a previously issued cash loan, in addition to the principal payment on it before the expiration date, in accordance with the terms of the signed contract. That is, such cash contributions should not be considered mandatory, can be made by the borrower only at his own request. However, if a special clause was specified during the registration of an agreement, then before you close your debts, the client must always warn the institution’s employees about this by writing a written statement in the prescribed form.

Options to Take in Case of Early Repayment of the Loan

In case of early repayment of the loan, the borrower may use several options provided by the loan processing procedures:

  • The procedure for full early repayment of the loan. Under such conditions, the client of the banking institution must write a special statement, notifying the bank employees in advance of its intention to repay the loan in full. A written statement according to a certain accepted procedure is submitted for consideration by the credit managers of the organization where the loan was issued, which can take a period from several days to a whole month. In a clearly specified period, the client gets the opportunity to close all debts. At the same time, interest is accrued for the use of funds on the basis of the time spent on using this loan. Based on the results of the procedure, an official payment document is issued from the partner bank that issued the loan to the borrower, which means that the client has repaid the loan ahead of schedule and there are no complaints about it.
  • The procedure for partial early repayment of the loan must be provided for under the contract between the two parties. If such a condition occurred in the official document, the client may send money to close the existing debt. In this case, the size of the debt may be reduced by the amount that he paid. The interest charges of the subsequent period will fall on the amount minus the one that was paid earlier.

Asking the question “Is it possible to repay a loan ahead of time?”, the borrower must first clearly know the conditions of his cooperation with a financial partner, in order not to leave behind a mark of a client with a bad credit history. He should carefully examine each item of the agreement, not lose sight the smallest details, clearly, in a strictly agreed time pay the funds.