The 3 things to know:
- Penalty : cannot exceed 1% of the residual debt
- When to extinguish : the loan can be repaid at any time
- Renewal : get the renewal of a loan with the best fifth sale offers
Extinguishing a personal loan before the natural maturity is possible by paying the amount due and paying a penalty of early termination , fixed at the signing of the contract. The penalty serves to compensate the bank (or the financial company) for lost revenue resulting from interest on installments not yet paid. However, not always extinguishing the debt in advance is advantageous because, as with mortgages, it is the time factor that makes the difference.
By law, the penalty for early termination cannot exceed 1% of the residual debt .
Repay the loan: the amortization plan
Also in the case of personal loans, the amortization plan followed by Italian banks (or financial companies) is the French one , according to which the interest is paid first and then the capital is borrowed. The first installments consist of a preponderant part of interest and a minimum amount of capital. As the loan proceeds, the interest rate goes down and the amount relating to the capital increases. This mechanism therefore suggests that, if it is possible, it is advantageous to pay off the debt in advance only if one is at the beginning of the loan , ie when the savings on the interest due to the bank can be substantial.
Furthermore, if you sign up for an ICP (Credit protection insurance) insurance policy when you sign the contract and pay it in a lump sum, before paying off the loan , you should check whether you can get the refund of the unused premium.
Read all the policy clauses carefully to find out if you need to pay a penalty for early repayment of the debt.
Pay off a loan with a fifth assignment
The law provides that even a loan with salary assignment can be extinguished at any time , subject to payment of the residual debt and payment of the early termination penalty , if provided for in the contract, and that, also in this case, can be at most equal to 1% of the residual capital . But how does the sale of the fifth work? If a loan is canceled with a assignment of the fifth before the natural expiration, the preliminary expenses and the stamp duty will be lost. Instead, bank commissions can be partially recovered, if provided for in the contract; while the life insurance (compulsory for this kind of loan), paid in a single payment at the beginning of the loan, is reimbursed for the part of the premium not taken , even if, in some cases, the request for reimbursement must be made explicitly.
Renew a loan with a fifth assignment
Finally, it is possible to obtain the renewal of a loan by assignment of the fifth but only under certain conditions regulated by law. Two cases: those who have signed a loan assignment lasting up to five years can obtain a renewal at any time provided that the new loan has a duration of 10 years and that, previously, no loan has ever been entered into with sale of the fifth of such duration. On the other hand, those who have signed a fifth assignment for more than five years can obtain a renewal only after paying two fifths of the amortization plan .
to know
When can I request a renewal?
If you have contracted a ten-year fifth assignment (equal to 120 installments) you can obtain the renewal only after four years have passed, ie after paying 48 installments.
Loan estimate of 10000 euros
| Financial: | Simple Loan |
| Product: | Personal Loan |
| TAN Fixed: | 4.25% |
| APR: | 4.44% |
| Loan duration: | 60 months |
| Amount Financed: | € 10,000 |
| Total due: | € 11.117 |
Monthly installment € 185 , 28 Feasibility check
| Financial: | Legos |
| Product: | Personal Loan |
| TAN Fixed: | 5.16% |
| APR: | 6.70% |
| Loan duration: | 60 months |
| Amount Financed: | € 10.146 |
| Total due: | € 11.735 |
Monthly installment € 193 , 19 Feasibility check
| Financial: | Find Loan |
| Product: | “Your Projects” Credit |
| TAN Fixed: | 6.01% |
| APR: | 6.18% |
| Loan duration: | 60 months |
| Amount Financed: | € 10,000 |
| Total due: | € 11.602 |
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