Taking out a loan always involves careful planning of the available funds. Borrowers often deliberately choose a loan with a special repayment. This means that additional, unspecified funds can be paid to the lender. However, this option is often only possible if it has been contractually agreed beforehand.
Special payments for installment loans
An installment loan has a comparatively short term with fixed monthly installments and a fixed interest rate. A loan with a special repayment can help to reduce the agreed term or to replace the contract early. With many loans, special payments can often only be made once a year. The conditions are stored in the contract or must be agreed with the lender.
The exception is the installment loan. It may be terminated by the borrower after a minimum term of six months and redeemed early. No further fees may apply. For other contracts, so-called prepayment penalties can be claimed. These are fees that the lender, according to the contract, charges for loans canceled early.
The situation is different, for example, with mortgage lending. Of course, this form is also available as a loan with special repayment. And here, too, the possibility is often given to additionally pay in unexpected or saved funds. Fixed framework conditions are specified. In many cases, the amount of the special services may not exceed a certain percentage. There are clauses that allow payments of five to ten percent per year . Agreements that no more than 25 percent of the total amount may be made as special repayments are also common during the fixed interest period.
To negotiate a special repayment contract, lenders often raise the interest rate. This can lead to an increase of around 0.1 percent depending on the provider. Therefore, each borrower should carefully examine the conditions and their suitability before agreeing a special repayment.