What is more profitable to repay the loan ahead of schedule. How to properly repay a loan with a permanent (annuity) payment ahead of schedule
When applying for a loan in loan agreement the terms of its repayment are negotiated - the terms and amounts of payments. You can repay the loan both in parts - in periodic payments, and by paying the entire amount at a time (this option is much less common). If the borrower has the opportunity to repay his debt earlier than the terms specified in the payment schedule or in the agreement, then he can repay the loan ahead of schedule.
At the same time, it does not matter whether the borrower is ready to pay the entire amount of the debt at once, or he has money only to exceed the next periodic payment. In the first case, we will talk about full early repayment of the loan, and in the second, only partial.
What loan can be repaid ahead of schedule?
Civil law allows early repayment of any type of loans:
- interest-free;
- a loan with payment of interest, but issued for personal needs by a borrower-citizen;
- business loan.
But in each of these cases there will be their own characteristics of early repayment of the loan.
Fines and restrictions for early loan repayment
The law allows early repayment of a loan without any commissions and fines. Even if such conditions are spelled out in the contract, then they can be invalidated.
In case of early repayment interest-free loan there are no restrictions. You simply deposit the amount you have at any time convenient for you.
If you took out a loan for personal, family needs, then there will be some time restrictions. You need to notify the bank 30 days in advance of depositing "extra" funds. writing... The loan agreement may set another, shorter period for notification of early repayment of the loan.
In the case of a loan for business purposes, early repayment of the loan is possible only with the consent of the bank.
What actions need to be taken to repay the loan early?
- Review your loan agreement for early repayment terms. If a shorter period for notifying the bank about early repayment of the loan is not indicated there, then it is necessary to be guided by the norm of the law on 30 days.
- Prepare a written notice to the bank about early repayment of the loan. Indicate in this document the following data: the number of the loan agreement, the name of the borrower, full or partial early repayment of the loan is expected, the amount and terms of repayment.
- It is advisable to personally take the notice of early repayment of the loan to the bank and hand it over to the responsible employee against signature. If this cannot be done, then send a notification by registered mail with a notification to the address of the bank.
- On the appointed date, enter cash to repay the loan.
- If you make a full early repayment of the loan, then ask the bank for a certificate of full repayment of the loan and that you have no debt.
Advantages for the borrower in case of early repayment of the loan
In case of early repayment of the loan, the following positive aspects can be distinguished for the borrower:
- reducing the cost of paying interest - the bank can only demand interest that is accrued before the day the loan is repaid;
- reduction of the loan repayment period or reduction of the size of periodic payments (in case of partial early repayment of the loan);
- good credit history and the ability to issue new loan.
Practice shows: many citizens do not understand the issue of debt repayment, moreover, they have a loan and often more than one. Mistakes when interacting with financial and credit institutions are made even by borrowers who have turned to borrowing services not for the first time. If you have already decided to borrow money from the bank, you should calculate in advance the costs of paying interest and clarify the possibilities for early payment without additional, unexpected costs for yourself.
Is early repayment of the loan beneficial
It is considered normal that the borrower seeks to save as much as possible on overpayments on credit funds, and one way is to pay before the agreed time. To repay the debt ahead of schedule means to pay off the debt in full before the date specified in the loan agreement. The term “installments” refers to the deposit of amounts that are larger than the regular payment schedule. What is the best way to repay the loan so that it is profitable?
Early repayment a consumer loan, from the perspective of the person being credited, is positive, since it gives the borrower monetary savings. For banking organization the borrower's calculation of the debt before the due date is not financially interesting. At first glance, this is not entirely clear: the debtor returns the money to the creditor in full, but commercial institution this threatens the loss of planned interest payments. Therefore, any bank seeks to draw up an agreement with a benefit for itself so that the borrower does not have an incentive to pay off the debt prematurely.
If a citizen stops paying the debt, finding himself in difficult financial circumstances, in this case, the creditor, as a rule, also does not remain at a loss. Collecting overdue debts by judgment or through a collection company, the lender receives another additional income in the form of fines and penalties or from sales collateral... In case of early settlement, the bank has to change the payment schedule, recalculating interest charges, reducing them not in its own favor.
Advantages and disadvantages
Financial and credit institutions resort to all sorts of tricks that hinder the desire of clients to close the contract before the planned, specified date. Until November 1, 2011, banks practiced penalties for the outpacing rates of debt settlement, which covered the creditor's lost profit. After the entry of legislative amendments to the Civil Code Russian Federation, it became possible to repay the loan debt earlier than the deadline without penalties at any time.
For those wishing to take advantage of the main advantage of early payment - savings on interest payments - you must not forget mandatory notify the creditor in writing of such intentions. This is given thirty days before the scheduled date. In advance, you should carefully read the terms of the agreement and the rules for such cases, since circumstances that are not always convenient for the borrower may be laid down here. Pay attention to:
- early settlement date;
- minimum redemption limit (usually equal to standard amount payment);
- sequence of payments;
- method of making a contribution.
The desire of citizens to get rid of the credit burden is understandable, but depending on the economic situation in the country, it is objectively unprofitable to pay the debt in advance. In a crisis situation, rising prices for goods amid inflation, circumstances are created for debtors when a person returns less money than he took, while the amount remains the same. In addition, with inflationary growth rates, new loans will be provided at higher rates.
Among the loans for which it is better to pay off as quickly as possible, the first place is occupied by express loans issued in shopping centers when purchasing goods. Such an attractive view " quick money" it's expensive. External profitability quick registration, lack of documentary requirements turns around high stakes, and the goods with an express loan, even short-term, cost double the cost.
Bank limiting requirements
According to the analysis of the financial sector, 2 out of 10 loans are paid ahead of schedule, where the leaders are the mortgagees, then the recipients of car loans and those who took consumer loans. For the bank, the main source of income is interest on loan products: if the amount of debt is higher, then the interest charges are large. Therefore, any bank does not want to miss the benefit of interest income and financial institutions are insured against the risk of early closure already at the stage of concluding a loan agreement, using an annuity settlement scheme.
The bank is not entitled to refuse the borrower today in accordance with the legislative norms in the field of lending, as amended by the law of 19.10.2011 No. 284-FZ (under agreements signed before 01.11.2011). As a result, within the framework of legal requirements, banks establish their own rules for early repayment of loans. Restrictive measures are the conditions for establishing a moratorium on payments in the first months of the contract, specific methods of depositing money, the presence of commissions, and limiting the minimum amounts for payment.
Types of loan payments
When applying for a loan, clarify whether you have the right to choose a debt repayment scheme. The features of the subsequent tactics of early cancellation depend on the option used. Banks today practice differentiated and annuity methods. The first option implies a monthly decrease in regular payments, with the second, every month the borrower must pay fixed amount.
Differentiated payment consists of a fixed, fixed amount allocated for the repayment of the loan body, which is calculated in proportion to the number of months of the agreement. The second part of the payment is interest on the loan balance. With the annuity option, the entire cost of the loan is calculated (with the exception of a one-time commission fee) and then divided by the crediting period.
What loans are better to repay with differentiated payments
In a differentiated contribution scheme, the borrower first pays large contributions, but subsequently their size is reduced by reducing the interest charges on the decreasing debt. When funds are deposited, the balance of the debt and the interest accrued on it are automatically recalculated, decreasing at the same time. Choose this scheme more profitable for long-term and large loans (mortgage, car loan), it is suitable for citizens:
- having an unstable income;
- those wishing to reduce overpayment;
- issuing a loan for a long period.
Features of repayment for annuity payments
In the question of how best to extinguish consumer credit, the payment scheme is becoming a priority. With an annuity, the installment, if paid before the deadline, is used to pay off both the loan body and interest expenses. The original schedule includes principal, interest and constant commissions, with the borrower paying the bulk of the interest payments in advance - a large part of them serves the accrued interest, and not the body of the loan.
By the end of the term, the main part is already going to pay off the principal debt. In case of early installments, the payment schedule is violated. Interest previously paid in advance is legally classified for the bank as unjustified enrichment and needs to be recalculated. The annuity scheme is used by individuals for consumer loans. The method is beneficial for the stability of payment, budget planning and is suitable for the following categories of citizens:
- having a stable salary;
- not possessing financial opportunity pay over a fixed amount;
- issuing a loan for a short period.
Loan repayment options
There is a difference between partial and full payment of the loan. In case of partial early repayment, the body of the debt is reduced by the amount deposited. Here are possible options, previously negotiated by the agreement:
- payment is collected at a regular payment and you must have funds in the account for debiting in the amount of the next payment and an additional contribution;
- due to the contribution, the principal debt is immediately reduced and the volume of payments is recalculated, then a smaller amount must be paid on the day of payment.
Upon full repayment, the borrower pays funds corresponding to the balance of the debt in the amount of interest accrued for this period. Any repayment is beneficial for the borrower, especially in relation to a mortgage, no matter how dissuaded bank employees... In addition to financial savings, a citizen receives full right to dispose of property, exemption from compulsory insurance property.
The only drawback is that not everyone can find funds for ahead of schedule payments without a significant drop in the income side of the family's budget and the need to apply for a new loan. It should be borne in mind: banks often add "early adopters" to the black list of persons who, when applying for a loan again, may simply be denied without explanation. Therefore, early repayment made by the end of the contract will become an additional plus to your credit history.
How to properly repay a loan
The advance payment algorithm is determined by specific credit terms... As a rule, the sequence of actions of the borrower is as follows:
- Notify the banking organization about the planned payment. Typically, a maturity of at least 14 days is set, although individual banks allow repayment at any time without prior notice.
- On the day of payment, deposit the required amount to the card / account. The method of replenishment is provided for by the terms of the agreement.
- Fill out an application for repayment of the debt ahead of schedule at the bank's office.
- Wait until the funds are debited with confirmation by appropriate documents (credit slip, account statement) and the schedule recalculation.
- Sign a new settlement schedule or receive a certificate of full debt closure.
- In case of full payment, make sure that the bank accounts accompanying settlements under the agreement are closed and that the encumbrance on the collateral is removed.
- Save all loan documentation, including payments.
Conditions of the loan agreement
Each banking organization independently sets the rules for contributions ahead of schedule. For example, the presence on the card / account of the required amount, deposited in any way, is sufficient. Some banks require you to deposit cash through the cashier, more progressive ones, such as Sberbank, VTB-24, provide for the possibility of online repayment without visiting the office and issuing an application. For this, the borrower needs to open a comprehensive service agreement and know the details for writing off.
With the latter method, funds can be debited not on any date, but only on the day of payment, and the amount of the extraordinary amount should not be less than the next installment. When making ATM contributions, there are restrictions on the maximum amount (as a rule, 30,000-50,000 rubles). For larger contributions, you must contact the bank branch. It is also important to clarify the day for payment - it can coincide with the schedule or be arbitrary.
When transferring funds from another bank, please note that it takes time to be credited, according to the rules - up to five working days. The borrower should not forget that under Article 805 Civil Code, if the debt is repaid ahead of schedule, the lender is entitled to receive interest from the borrower, calculated inclusively up to the day when the loan was repaid in full or in part exceeding the schedule.
Early repayment application
According to article 810 of the Civil Code, part two, the amount of a consumer (non-commercial) loan can be returned by a citizen ahead of schedule in full or in parts on the basis of mandatory notification of the lender thirty days (at least) before the day of return. Loan agreement may set a shorter period for the submission of such notification of the citizen's intention to return the funds. So, in practice, banks provide 2 weeks for filing an appeal.
Loan recalculation
An extraordinary payment leads to a reduction in the body of the loan, the principal debt. Interest paid is calculated according to special formulas, different for differentiated and annuity schemes, but providing general principle- accrual on the loan balance. The smaller the debt, the lower the interest costs, therefore, the recalculation of all components of payments is mandatory in this situation.
Decrease in payment or shortening of the loan term
Often, leaving no alternative to customers, banks only offer a reduction in the regular payment when repayment is due before maturity, while the option of shortening the term of the loan agreement expiration is possible. Psychologically, a decrease in payment is attractive for the client: the load on the monthly budget is reduced, free funds are released that can be used for early payment.
At the same time, mathematical calculations show that a decrease in the term of the loan gives a large percentage savings. So, with a differentiated scheme, shortening the duration of lending is even more beneficial. The approach of banks in reluctance to shorten loan terms is understandable: they lose a large share of profits, often, in practice, without informing borrowers about the existing opportunity.
New payment schedule for partial early repayment
The payment by a citizen of the next payment earlier than the deadline is partially reflected in all components of the contribution. The originally envisaged repayment schedule no longer corresponds to the balance of the debt, therefore, revising the schedule and signing it new edition by all parties (the credited person and the creditor) becomes a prerequisite in this situation. A new schedule, certified by the bank's seal and signed by the credit manager, must be issued even with the remaining 2-3 payment periods. It is also necessary to check if the date of the periodic application has changed.
Borrower rights
the federal law dated 19.10.2011 No. 284-FZ "On Amendments to Articles 809 and 810 of Part Two of the Civil Code of the Russian Federation", which entered into force on November 1, 2011, secured the right of citizens-borrowers to repay ahead of schedule credit debts... The law applies to relations that arose under contracts concluded before the date of its entry into force. If the contract, executed after 11/01/2011, contains conditions for penalties, commissions, fines for extraordinary payment of debt - they are illegal and can be challenged in court.
Allocation and receipt of interest
It is most profitable to repay the loan before the end of the contract mortgage borrowers- savings on mortgage interest are maximized and the property is placed at their disposal. For such lending, as a rule, an annuity method is provided. When paying the mortgage ahead of schedule, on the basis of Article 809 of the Civil Code, the borrower has the right to demand from the banking organization a recalculation and reimbursement of part of the previously paid interest.
Return of insurance
Loans for the purchase of housing or a car are accompanied by the obligatory requirements of the bank to insure property in accordance with Article 31 of the Law of 16.07.1998, No. 102-FZ "On Mortgage (Pledge of Real Estate)". Besides, financial institutions compliance with the terms of life insurance of the credited person is also practiced. The latter is carried out with the approval of the client. Having paid for the insurance, the borrower, in addition to the question of how best to repay the loan, is also puzzled by how to return the insurance funds in full settlement with the bank: they can reach 40% of the loan cost.
After paying off the debt, you have the right to return insurance premiums if it is provided for in the insurance contract. If there is a clause about the impossibility of returning unused insurance, closing the loan agreement ahead of time entails the loss of the right to return the premium. After making sure that there is a right of return, when applying, you must also take into account that:
- there should be no overdue debt;
- to return the insurance, 5 days are given after the contract is signed.
The insurance company can reimburse part of the funds if more than six months have passed since the signing of the contract. A full refund of insurance funds is available in situations where the debt is paid off in the first two months after registration insurance policy... In all options, you need to contact insurance company with:
- passport;
- credit agreement (copy);
- a certificate of complete closure of the debt.
The return of part of the insurance premium in case of early payment is possible in a pre-trial and judicial order. At the stage of the pre-trial decision, you need to file a claim with a banking and insurance organization. According to the law, 30 days are given for consideration of the application. In the absence of a response, then it is already necessary to write an application to Rospotrebnadzor (the consideration time is the same - 30 days). If the answer of this instance does not suit you, you can appeal against the actions of the credit and financial institution by filing statement of claim to court.
There are cases when insurers instead of a citizen borrower can pay off a loan. This is prescribed by the clauses of the insurance policy and depends on the type of insurance:
- Life and health insurance of the loaned person. The basis for payments is the death of the borrower, his disability due to a serious illness, disability.
- Collateral safety insurance. An insured event is considered unintentional damage to property (natural disasters, fire, flooding).
Video
Let's try to figure out what kind of savings the borrower will receive by early repayment of the loan received, and also how the benefit is achieved.
Let's start with a little problem
Input data:
- Amount: 500,000 rubles.
- Term: 60 months
- Rate: 22%
Additional Information:
* In case of partial early repayment of the principal debt, the borrower chose to reduce the term of the loan agreement.
How much savings will the borrower get?
Answer options:
- A. RUB 58,948
- B. 70,000 rubles.
- B. RUB 128,948
The correct answer is the first option, the benefit is RUB 58,948, it is by this amount that interest will decrease, and 70 thousand rubles. went to the repayment of the body of the loan.
Let's take a closer look at this.
Option 1. The borrower repays the loan according to the schedule
Table 1. Excerpt from the schedule, when the loan is repaid according to
the terms specified in the contract.
Month | Monthly payment | Interest payment | Debt repayment | Balance owed |
---|---|---|---|---|
Total |
The overpayment for the entire period will be 275.7 thousand rubles, the loan term is 5 years.
Option 2. The borrower repays the loan ahead of schedule
Table 2. Excerpt from the schedule for early repayment of the loan
Month | Monthly payment | Interest payment | Debt repayment | Balance owed |
---|---|---|---|---|
28 333 | ||||
33 333 | ||||
33 333 | ||||
Total |
With this option, the loan term was reduced by 8 months, and the overpayment - to 216.8 thousand rubles.
For clarity, we summarize the above figures in one table:
The figures clearly show that it is profitable to repay the loan ahead of schedule, in the example given, the borrower paid the Bank 21% less than if he repaid the debt according to the schedule, that is, savings of almost 60 thousand rubles, and this is a very decent amount.
Now let's see how the savings are achieved.
Everything is simple here: interest is charged on the balance of the outstanding loan, that is, with any "early" debt, the principal is repaid faster and no interest is charged on it.
Hence, we draw the following conclusion: the earlier you start to make early repayment of the loan, the more savings you can get.
Key points
- It is beneficial to repay loans faster than the schedule both with a standard schedule (in equal installments) and with an annuity.
With an annuity payment, the savings will be greater, since the principal debt occupies a smaller share in the payment structure than with a repayment schedule in equal installments. - The earlier you start early repayment of loans, the more savings you can get.
- The longer the loan term, the greater the benefit from early payments.
If you have a mortgage, then early repayment will significantly reduce both the overpayment and the term of the loan.
To obtain greater savings when making early repayment, you need to choose an option in which the payment amount remains unchanged, that is, the loan term is reduced.
Since on average there are 3 loans per Russian, we decided that IT specialists would also be interested in learning how to repay their loans and debts correctly and profitably.
Getting a loan is very easy, but paying off creditors is much more difficult. As practice shows, you can get out of the deepest financial hole if you do not despair. Our advice and methods will help you pay off even with large debts: competently extinguish debt, find money to pay, choose optimal way payments.
How to pay off credit card debt
1. Conversation with creditors
In no case should you disappear, drop calls and ignore email notifications. As soon as you feel that the situation is critical and you will not be able to repay the loan on time, inform the lender about it. Clarify that you are not going to cheat the bank, that you have regularly paid the loan until specific circumstances have arisen, and that you are going to regularly pay the amount you can afford. Nobody is interested in long litigation, on the contrary, they will surely meet you halfway.You may be offered to lower interest rates for a while, or even cancel some late penalties, change the payment schedule. All this will help you move on, and as an option, your credit history will not be affected. Of course, you should stop using your credit card by fixing the debt so that it does not increase.
Advice:
- Let me know that you cannot pay any more.
- Record the debt.
- Try to soften the conditions.
The bank is no less interested in repaying the loan. There are cases when banks can close a loan even at a loss, while this will not affect the client's credit history in any way - a normal business process of cost management.
2. Greater than minimum payment
Credit companies and banks are very fond of it when you pay exactly what you need. It seems to you that you are paying off the loan, albeit a little, but in fact your debt is only increasing due to interest. If you pay even a little more, it will be more profitable, as it will shorten the payment terms. As practice shows, about 10% of income is spent on random things, so try depositing them into your credit account right away.
For example, let's take a credit card with a spent credit limit 100,000 rubles. The table of minimum payments for this amount will look something like this:
Months |
1 month |
2 month |
3 month |
4 month |
5 month |
6 month |
7 month |
8 month |
9 month |
10 month |
11 month |
12 month |
Min. payment |
RUB 12 083.33 |
RUB 10 875.00 |
RUB 9 787.50 |
RUB 8 808.75 |
RUB 7,927.88 |
RUB 7,135.09 |
RUB 6 421.58 |
RUB 5,779.42 |
RUB 5 201.48 |
RUB 4,681.33 |
RUB 4,213.20 |
RUB 3 791.88 |
Repayment |
RUB 10,000 |
RUB 9,000 |
RUB 8100 |
RUB 7290 |
6561 RUB |
RUB 5,904.90 |
RUB 5,314.41 |
RUB 4,782.97 |
RUB 4,304.67 |
RUB 3,874.20 |
RUB 3,486.78 |
RUB 3,138.11 |
Interest |
RUB 2083.33 |
RUB 1,875.00 |
RUB 1,687.50 |
RUB 1,518.75 |
RUB 1,366.88 |
RUB 1,230.19 |
RUB 1,107.17 |
RUB 996.45 |
RUB 896.81 |
RUB 807.13 |
RUB 726.41 |
RUB 653.77 |
Loan body |
RUB 100,000 |
RUB 90,000 |
RUB 81,000 |
RUB 72900 |
RUB 65610 |
RUB 59,049 |
RUB 53,144.10 |
RUB 47,829.69 |
RUB 43,046.72 |
RUB 38,742.05 |
RUB 34,867.84 |
34864,78 |
As you can see from the table, the minimum payment does not pay off the debt in one calendar year, as many believe
By the end of the year, you will be able to pay only 60,000-70,000, and interest will be charged on the remaining debt. In fact, the minimum payment is designed in such a way as to make your loan as long-term and profitable for the bank as possible. If the minimum payment is made even with small, but delays, it can all go to pay off fines, overpayment interest, penalties, current interest. You will pay, but the debt will not decrease at all.
Advice:
- To close the card in less than a year, make x1.5-2 minimum payments
3. Plan your budget
Surely there are things for which you spend more than you need, considering that this minimum amount will give nothing. What can a cup of coffee do to pay off a car loan? It sounds naive, but write down all your expenses and you will see what you can save on. No fiction, but even small amount will be enough to cover the interest payments, and besides, pay a little more than the minimum payment. This is exactly the money that you spend on nonsense.
Advice:
- Optimize costs
4. Try to increase income and prioritize
There are no general tips here. Someone can take more working hours or days, someone - to work longer and receive a bonus. Some make money with their skills and hobbies. Take on any temporary job, look for part-time jobs, you need to establish your financial position... There is a car - get a taxi driver. You can try to sell unnecessary items. You can buy anything from an old washing machine to a broken children's bike. What has been gathering dust on the balcony for years can bring you $ 20- $ 50. Enough for the minimum payment already.
If you are saving up money for training, it might be worth spending it now, postponing plans for a year. If the family has two cars, you can sell one of them, so you will not only get a large sum, but you will also not spend money on gasoline and maintenance, and renting a garage. Ride on public transport more inconvenient, but cheaper. Try to give up your hobbies and hobbies, this will free up a certain amount every month and set aside time for a part-time job.
Advice:
- Build up your cash: new income = new credit opportunities.
American methods of debt settlement
1. First of all - with the highest discounted rate
It would seem that this is obvious, but many try to pay off small loans first in order to pay off at least a part. In this case, you are overpaying the service interest, so total amount it turns out more. For example, you have one loan at 13% per annum, the second at 10%. With the same loan amounts, focus on repaying the 13% loan while repaying differently minimum payments.
You will have to pay interest anyway, but this way you will make it less.
If the amounts are different, then it is necessary to bring the interest rates in line with these amounts. Suppose we have two credit cards: Alfa-Bank, with a debt of 100,000 at 25.9% and Sberbank with a debt of 80,000 at 19%. We bring the rate of Sberbank to the rate of Alfa-Bank:
19 * (100/80) = 23.75%. That is, the main efforts must be made to repay the loan at Alfa Bank.
If we assume that the amount of debt in Alfa-Bank is 50 thousand, then the reduced rate of Sberbank will be 19 * (80/50) = 30.4%, which makes the repayment of this debt of paramount importance.
Advice:
- Count the loans: extinguish those that are profitable, not those that you want.
2. If the accruals for several loans are approximately equal
Reverse method: if you have several loans with equal charges, extinguish the smallest one. This is the so-called "snowball method": the repayment of one loan motivates you to repay the next, while you reduce their number. Most people find it easier this way, and they subconsciously lean towards this method. Please note that if you are facing confiscation or there is clearly more accrual for one of the credits, this method is excluded, repay the larger loan, as described above!
Advice:
- In case of equal debts, try to close a specific loan
3. Restructuring and refinancing
If you borrowed a large amount to develop a business or buy an apartment, and paid at least a third, you can ask for restructuring. It is beneficial if the bank is now giving loans for the same purposes at lower interest rates. You may be met, and you will receive more than just a reduction total debt, but also the extension of the term for a new loan. That is, you can take advantage of the restructuring to reduce the monthly payment by increasing the total loan term. Restructuring makes sense when interest rates differ significantly, since you will have to pay commissions and some other payments during registration, so carefully calculate the benefits.
By the way, not all banks agree to refinance own loans, so you can try to sell the loan to another bank. For example, VTB24 and Sberbank are engaged in refinancing mortgage loans. Raiffeisenbank can refinance both its own and other people's car loans.
Advice:
- If you can't pay - restructure: restructuring will collect everything in one payment and reduce the monthly amount.
4. Repayment from another credit account
If you want to repay a loan from another bank credit card where you have no debt and a certain amount that you can use, make sure it is profitable. Even if you can use the amount at 0%, there are always fees associated with transfers, so you will lose some of the money, but at the same time increase the number of loans that you have to repay at the same time. If you choose this method, to calculate the amount, divide the debt by the number of months during which the interest-free loan is valid, and make sure that you have enough funds to pay off.
Advice:
- Avoid fines: use other credits if the situation requires.
Comparative table of American repayment methods:
Repayment method | Advantages | disadvantages | When it comes up |
We repay the loan with the highest accrual | You will save more every month | You need to make every effort to pay high interest rates for the main loan and minimum payments for the rest | When it is important to save on interest, when there is a risk of property confiscation |
We repay the smallest loan | The number of credits decreases, you see the result | Not always profitable from a financial point of view, not suitable if the loans are at least approximately equal in accruals | When you need to at least start paying off loans and see that the result is achievable |
Restructuring or refinancing | Allows you to significantly save with the correct calculation: extend the payment period, reduce the interest rate and monthly payments | Additional costs for re-issuing a loan and insurance. It does not make sense if the remaining payment period is short. | When the term of the residual payments is longer than the paid ones, and the loan amount is quite large. |
Repayment from another credit account | You save on interest so you can pay off your principal faster | The need to make monthly payments on an interest-free credit card on time. | When the term of the interest-free loan is long enough and you can repay this amount on a monthly basis |
These simple techniques will help you avoid various unpleasant situations with loans. Loans are a very useful and right tool that expands our capabilities, the right attitude to loans is the key to success.
Are you planning to get rid of the credit burden ahead of schedule? Read in the article how it is more profitable to do this, and whether it is worth repaying the loan ahead of time in the current economic situation.
Early loan repayment is profitable or not
When you decide to pay off your loan ahead of time, pay attention to your payment schedule. It is of two types:. With each of them, the loan is available to close in full and in part, the procedure is the same in any case. Only in case of partial cancellation, the amount must be indicated in the application.
With annuity payments, closing the loan in installments is beneficial if you agree with the bank to reduce the loan term or reduce the amount of the monthly installment. In the first case debt burden will not change, but the percentages will decrease. In the second, the monthly burden on the budget will decrease, but the percentages will practically remain unchanged.
Does your loan agreement state that the payment is differentiated? If you decide to partially close the loan, then it is beneficial to immediately deposit an amount that is more than the required payment. The body of the loan decreases, the balance of the loan also decreases, and the interest falls accordingly.
However, banks do not overly welcome the client's desire to quickly get rid of credit obligations. For them, early repayment of the loan does not bring the planned profit. Previously, they used penalties for premature debt closure. Now it is forbidden to them.
Today, creditors are required to work within the framework of the following articles of the Civil Code of the Russian Federation:
Read the terms and conditions. It spelled out how to repay the loan ahead of schedule, in full or in part.
Example: conditions for partial and full closure of debt at VTB24
The relevant application must be submitted to one of VTB24's additional offices at least one business day before the date of the scheduled loan closure.
The bank offers two ways to partially close the loan:
- reduce the monthly payment, but leave the loan term unchanged;
- reduce the term of the loan, but at the same time keep the amount of the monthly payment.
In the application, it is important to indicate the method of repayment of the loan. Of the two methods, the client chooses which is more profitable for him.
Full early repayment of the loan is carried out on any working day following the date of application.
Is it profitable now to repay the loan ahead of schedule?
The NBCH (National Bureau of Credit Histories) reports that in 2015 the share of borrowers who close loans ahead of schedule has almost halved.
The solution is correct in several cases:
- If a person has a stable income above average and loan repayment does not affect the family budget.
- If interest rate on the loan is higher than inflation. Due to the fall in the value of money, repayment becomes cheaper.
Those who have no confidence in the future are advised to invest free funds in times of crisis in a deposit.
- Before the procedure, complete or partial repayment loan, take a statement from the bank, where it will be indicated.
- For the remaining debt, you need to get a new calculation of payments.
- Be sure to get a certificate of closing a credit account.