Early repayment of debt amounts. Full and partial early repayment of loans

When applying for loans, many people primarily focus on the monthly payment, and secondly, on the loan term, hoping to pay off ahead of schedule.

Recalculation of interest when repaying a loan early

When repaying a loan ahead of schedule, interest is always recalculated downward due to a decrease in the size of the loan body and a decrease in the term.

Features of interest conversion

1. Recalculation occurs after changing the size of the loan body.
2. When paying a partial amount of the debt, the schedule is recalculated according to different options:

the term changes, the payment is retained;
the payment is reduced, the end date remains unchanged.

3. A schedule with new calculations is generated on the nearest loan payment date or on any other day, if provided for by the lender’s terms and conditions.

When repaying a loan early, is the principal or interest paid off?

Several years ago, when repaying a loan early, most often, at the request of the lender, interest was paid for the entire loan period, calculated according to the original schedule, regardless of how long the borrower actually used the loan.

In 2011, changes in legislation came into force that prohibit banks from applying penalties and restrictions to borrowers who wish to pay in advance. Currently, in such a situation, banks have the right to demand interest only for the actual time of using the loan.

Full and partial repayment

1. In case of full early repayment of the loan, the principal debt and interest for the period of use are fully repaid from the date of the last write-off.

Example: The monthly payment debit date is set to the 23rd of each month. In this case, on the payment date, the amount of debt and interest for the full previous period are written off. The borrower made the monthly payment on November 23, and on December 10 decided to repay the entire loan. In this case, he will need to pay the full balance of the debt as of December 10 and interest for 40 days: 30 days of November and 10 days of December, because On November 23, the payment for the previous period—October—was written off. With this scheme, there will be no need to return overpaid interest in case of early repayment.

2. Partial loan repayment means that in addition to the monthly payment, an additional amount is paid. In this case, the entire amount in excess of the payment is used to reduce the loan amount, and interest is recalculated at the time the repayment amount is written off.

Example: The payment debit date is the 23rd of each month. On November 23, the borrower made the obligatory payment, after which the debt balance amounted to 226,000 rubles, and 30,000 rubles for partial repayment. From the 24th, interest will begin to accrue on the balance in the amount of 196,000 rubles, which will amount to some savings.

How to repay a loan early as efficiently as possible?

Savings from early repayment depend on the following factors:

type of payment (differentiated/annuity);
deposit amount;
the period in which the extinction occurs;
scheme for restructuring the schedule after repayment (while maintaining the loan term or monthly payment).

With a differentiated payment, early repayment most often brings more benefits due to the fact that the total overpayment of interest is less than with a scheme with an annuity payment.

In addition, with an annuity payment, the highest interest is paid at the very beginning, so it is more profitable to make repayments in this initial period.

Approximate calculation of savings for full repayment depending on the type of payment

A comparative example will help you evaluate how best to make an early repayment and recalculate the interest on the loan: a loan of 500,000 rubles at 20% per annum for 5 years.

Calculation of savings for partial repayment depending on the type of schedule restructuring

Most often, with partial repayment, shortening the term allows you to save more than reducing the payment, although in any case there will be a benefit from recalculating interest.

Example: a loan of 500,000 rubles at 20% per annum for 5 years, after 1 year 100,000 rubles are partially repaid. The annuity will be 13,247 rubles/month, for differentiated payment the range will be 16,667-8,472 rubles/month.

As you can see, repayment with the choice of shortening the term is the most profitable option.

We return part of the insurance in case of early repayment of a loan or mortgage

Insurance has become an almost obligatory part of lending recently, and is not always welcome among borrowers. However, if a consumer or mortgage loan was issued with insurance and repaid early in whole or in part, there is a chance to get some of the money back.

Insurance can be paid in full for the entire planned loan period (for consumer loans) or for each year of insurance (for mortgage loans).

The insurance policy covers various risks of the bank and the borrower and the main criterion for calculation is the size of the loan body.

Refund of insurance in case of early repayment of mortgage

With this type of lending, the insurance policy is paid for a year in advance. If early repayment was made during this time, then the borrower must immediately after reducing the debt take a certificate of the balance of the principal debt and contact the insurance company as soon as possible to recalculate the insurance premium.

In such situations, insurance companies rarely refuse to return the overpayment, which can be returned directly to the borrower or offset against the next year's policy payment.

Recalculation of consumer loan insurance

In the case of the return of insurance on a consumer loan in case of early repayment, banks and insurance companies are very reluctant to meet the borrower halfway, offering to use the insurance policy even after the end of the loan obligations. The success of repayment of an overpayment largely depends on the terms of the loan agreement.

In any case, it makes sense to try to recover part of the cost of insurance. To do this, you need to submit an application to the lender and the insurance company, attaching a certificate of the balance of the principal debt or full repayment of the loan. If a positive decision is made, the insurer may return part of the money, but often using a discount factor for early termination.

In this article we will look at everything related to early repayment of a loan - what early repayment of a loan means, what full early repayment of a loan means, how to calculate early repayment of a loan, rules, and whether there is any compensation for early repayment of a loan.

Early loan repayment- this is the process of premature termination of a loan agreement with a credit institution by paying the entire amount of the debt. In other words, early repayment of a loan is the settlement of one’s loan obligations to the bank earlier than stipulated in the loan agreement.

People always have a lot of questions about early repayment of loans, because everyone has already learned how to take out a loan, but few have tried how to close a loan ahead of time, and in general, not everyone fully understands why this is necessary, what is possible and what is not in case of early repayment, and what the legislation of the Russian Federation says about this.

Let's get started!

Types of repayment

In fact, early repayment of a loan can be used as one of the methods, but this method is not included in the canonical methods of restructuring, although reasonable people can use it as the only competent method of restructuring their debts, since others do not work in Russia.

Why use early loan repayment as a debt restructuring? Why do you need to restructure your debt?

Each bank has its own methodology and terms for early loan repayment, but tries to rely on the Civil Code of the Russian Federation.

ATTENTION! IN In 2011, Amendment No. 284-FZ “On Amendments to Articles 809 and 810 Part 2 of the Civil Code of the Russian Federation” was adopted. From which it follows that banks no longer have the right to fine borrowers for early repayment of the loan, as well as has no right to demand payment of interest accrued beyond the date of early repayment of the loan. A the borrower, in turn, is obliged to notify the lender in writing about your intention to repay the loan early at least 30 days in advance before realizing your intentions. But at the same time, banks received the right to refuse borrowers early repayment of loans(this is already the banking lobby in action).

Early loan repayment can be of two types:

full early repayment of the loan
partial early repayment of the loan

Full early repayment of the loan assumes full repayment of the entire balance of the loan debt as of the current moment. Read the article to know exactly how much you need to repay.

Partial early repayment of the loan– this is a partial, not complete, repayment of the balance of the loan debt, most often exceeding the amount of the monthly payment. As a result of partial early repayment either the amount of the subsequent monthly payment or the loan term is reduced. This is understandable, with such a payment you seem to be covering more months in the payment schedule than is required.

If the amount of your debt has decreased as a result of partial repayment, then the bank is obliged to rearrange the payment schedule and recalculate the amount of accrued interest, and you must not forget to pick it up from the bank.

But all this is only possible if the loan agreement with the bank does not prohibit partial early repayment of the loan. And also if you act in agreement with the bank.

How to calculate

Everyone and everything needs to be controlled! You should not blindly believe that the bank will independently and honestly calculate the amount of your debt at the time of early repayment of the loan. It's better to double-check everything yourself.

SPDP = OD + P

P = OD*SK*Days/365/100

SPDP – the amount of full early repayment of the loan

ML – principal debt on the loan body

P – interest for using the loan

SC – loan rate in annual terms

Days – the number of days you used the borrowed money.

To easily calculate your debt balance when repaying a loan early, you can use an online early loan repayment calculator on the Internet.

But this method does not even guarantee 90% confidence, same as the above formula. If, as a result of independent settlements, you still owe the bank 2 rubles, then it will wash you out later. Do you need it?

Early repayment rules

In order to feel like a fish out of water when it comes to early repayment of loans, you need to know the golden rules of early loan repayment:

Full or partial repayment of the loan is possible. These are two different forms of early loan repayment, they are described just above
In case of partial early repayment of the loan either the term or the monthly payment is reduced.
If you repay the loan partially early, the bank is obliged to rearrange your payment schedule
In case of partial early repayment of the loan, the deposited the payment amount must be greater than the monthly payment amount, otherwise the payment will be counted as the next monthly fee
Must be given special attention to calculating the amount of debt, do not do this yourself, but instruct a bank employee
Notify the bank about early repayment of the loan in writing about your intentions
There is no fee for early repayment
Monitor the bank’s calculations and actions
You can repay the loan ahead of schedule in just 1 month, after its registration (this is the law), and in some banks much earlier
As a result, receive written confirmation from the bank that there is no debt

ATTENTION! Pay attention to the loan agreement. The law allows you to repay your loan early 1 month after you have taken out the loan. If the bank has any other terms specified in the contract, then they are breaking the law, but in order to prove this, you need to start suing the bank. Otherwise, employees of the credit institution will poke you into the loan agreement you signed.

Compensation for early repayment

A fairly common question from “green” users of credit services is the question: is there any compensation for early repayment of the loan?

Order

In general, the procedure for early repayment of a loan looks very simple.

ATTENTION! If in your city, for one reason or another, there is no longer the bank branch where you took out the loan, and the nearest one is several hundred kilometers away, then You can repay your loan early remotely. The most difficult thing in this matter will be to apply for early repayment of the loan from this bank. This can be done via Russian Post: send a registered letter to the bank's address with acknowledgment of receipt and a list of the contents. It is better to do this 30 days before the planned date of early repayment of the loan, so that everything is in accordance with the law. And only then repay the loan using any remote method. Don’t be afraid that you didn’t visit the bank, that you didn’t talk to the employee, that he didn’t sign anywhere, this method of loan repayment is very legally reliable for any resolution of contradictions in court.

In other standard situations, it is more correct to take the following progressive actions:

visit your bank branch
consult with a bank employee about the timing and procedure for early loan repayment in general
ask the employee to calculate the early repayment of the loan (if possible, check the accuracy of the calculations at home)
take the form loan repayment applications, fill it out in duplicate
and submit the application in accordance with the bank’s requirements for submission deadlines (as a result, the bank employee is required to mark the acceptance of the application for consideration)
further, it is possible to visit the bank branches again to deposit the debt amount through the bank cash desk
or deposit the debt amount in other ways (via a bank ATM, terminal, personal account on the bank’s website, etc.)

But if you decide to do everything to avoid visiting the bank’s office (be it independently calculating the amount of early repayment of a loan, independently searching for sample applications on the Internet, etc.), in our opinion, this is not entirely true, and may contribute to critical errors. It’s easier and better not to be lazy and go to the bank branch where you are going to repay the loan early.

Conditions

The conditions for early repayment of a loan are quite varied and very much depend on the specific bank. The diversity most often concerns the timing of early repayment (some banks allow loan repayment the very next day after issuance), deadlines and application forms, etc.

Borrowers often have additional funds that allow them to repay their loan faster. What is early partial repayment of a loan and what is its procedure - further.

What is partial early repayment of a loan?

Partial early repayment is the excess of the amount of the payment made over the amount specified in the agreement. In simple words, if the borrower needs to pay 10 thousand rubles this month. as a monthly contribution, and he makes 15 thousand rubles, then the amount of 5 thousand rubles is an early partial payment. In this case, the bank reduces the balance of the principal debt (the body of the loan) and recalculates the interest for using the loan.

Contrary to the popular belief that early repayment is not allowed by the banks themselves, this is not the case. The Civil Code of the Russian Federation guarantees the borrower's right to repay debts to financial institutions ahead of schedule. However, the loan agreement may provide for penalties for this, so before signing, the loan agreement should be carefully studied.

Procedure for early loan repayment

The procedure for partial loan repayment is quite simple:

Study the loan agreement. It must stipulate the bank's requirement to notify about the planned partial.
If there is such a requirement, contact the bank’s hotline and find out which branch is best for you to contact for advice. As a rule, the repayment procedure takes place where you took out the loan.
Approach the responsible manager and communicate your intentions. He will give you an application form “On partial early repayment of the loan.”
If a form is not provided, then write an application in any form, indicating the amount of early repayment. Be sure to fill out the application in two copies, one of which you keep for yourself with the registration number and signature of the person accepting it. When partially repaying a loan from Sberbank or another financial institution, indicate in the application the date of the transaction and the account number from which the funds will be debited.
Before depositing the amount into the cash register, notify the bank manager. This is very important, as the organization’s employees will need to prepare the relevant documents. The fact is that when paying a loan, the payment amount is first credited to your personal account, and only then to your credit account.

If you do not notify the manager of your intention to make an early partial repayment, only the amount specified in the agreement will be debited from your personal account. In this case, the balance will be written off next month, and interest on the loan will continue to accrue on the principal debt.

In case of partial early repayment, VTB will offer you two options:

recalculate the loan repayment schedule with a reduction in the payment amount;
shorten the loan term with the same schedule as specified in the agreement.

The first option is not suitable for mortgage lending. The fact is that the mortgage agreement, along with the payment schedule, is registered at the Companies House. Changing it requires mandatory registration with this department. Therefore, with a mortgage, you may simply have the loan term reduced.

Partial loan repayment: pros and cons for the borrower

This is a big plus for the borrower.

The client relieves himself of the debt burden and saves on interest, which is important in a crisis.

The disadvantages of early loan repayment will become noticeable when the national currency depreciates. In this case, it is more profitable to invest additional funds in the purchase of foreign currency in order to pay a larger amount when its price rises. However, there is one “but” here. Most banks tie the loan interest rate to the Central Bank rate, which, as a rule, grows in conditions of devaluation of the national currency. Accordingly, your future loan payments may also increase.

Before deciding on partial early repayment of the loan, carefully re-read the agreement. Calculate how much you will save in the future on this operation, taking into account possible commissions. To do this, you can use the partial loan repayment calculator on the bank’s website.
Be sure to check the loan balance after the transaction so that the funds do not get stuck in your personal account, but are transferred to your credit account.
Control the accrual of interest; they must be calculated taking into account the amount of early repayment.

The principal loan debt (LP), or the body of the loan, is the amount that the bank provides to the borrower at the interest established by the agreement for a certain period.

Debt consists of:

loan body;
percent;
commissions;
insurance.

If the loan is a mortgage, then the collateral property must be insured. Consumer insurance involves voluntary insurance. You can refuse the service within 14 days from the date of signing the agreement by submitting an application to the insurance company. Previously, the period was 5 days, but in September 2017, the Central Bank amended the list of standard requirements, increasing the period during which the client has the right to demand a refund.

If a person violates the terms or amount of monthly payments, the bank will charge a fine and penalty, which will increase the total amount of debt.

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How is the principal repaid?

Credit organizations offer two loan repayment schemes. Annuity (AP) and differentiated (DP).

Annuity payment

Money is deposited into the account in equal parts, but in such a way that 80% of the amount of the initial contributions is interest repayment and only 20% of the loan body. The bank uses this scheme most often, and by default, without even introducing the borrower to another payment option.

It is unprofitable to close a loan paid in this way early. The amount of ML will not significantly decrease in size over time, and the reward accrued for using the money will not be returned.

The payment amount will always be the same. This will allow you to plan your family budget and not have to specify the amount of the next payment.
The size of the approved loan will be larger, since the required payment should not exceed 50% of earnings. In the second option, the amount of payments is greater than under the AP and the borrower’s income may not fall within these parameters.

Experts believe that it is more profitable to repay the principal debt using an emergency loan if the loan is short-term and the amount is small.

Differentiated payment

Payment in unequal installments, i.e. first the principal is paid, and then the accrued interest on the remaining amount (monthly recalculation is done). The first payments will be larger than the last ones. Payment of the principal debt is carried out more efficiently and quickly.

In the first months, the borrower may experience financial difficulties, regularly paying increased amounts compared to the AP, but if the loan is closed early, it will be possible to save significantly. Most of it has been repaid and you won’t have to pay interest if you close it early.

Reducing payments will allow you to reduce your financial burden over time and insure yourself in case of possible financial difficulties. Experts advise that when taking out a loan for a large amount and a long term (mortgage, car loan), choose a DP.

When concluding a loan agreement, you should carefully read all the clauses. The customer needs to know how much a late payment or failure to pay for a long time can cost.

Banks, in case of violation of the conditions, impose a monetary penalty on the defaulter in the form of penalties, penalties and fines. Until recently, writing off ML when depositing funds to pay an overdue payment was the last thing to happen.

The first to write off were:

interest;
fines;
penalty;
fines;
interest;
main loan

Often, after paying fines, there was not enough money to pay for ML. The debt grew like a snowball. It was possible to cancel the penalty only in court, based on.

However, in July 2017, the Supreme Court of the Russian Federation, referring to the information letter of the Supreme Arbitration Court seven years ago, gave a clear explanation on this matter.

According to Art. 319 of the Civil Code, interest is written off first when repaying a debt, then the balance, and lastly the fine and penalty. Creditor costs, which are interpreted by banks in their favor, should be understood as costs associated with forced collection (payment of state duties, legal costs).

The loan agreement may also stipulate that the debtor is obliged to pay penalties and fines first, but this is contrary to the law, since such an agreement must be made within the framework of legal norms.

The debtor can challenge the incorrect write-off procedure by going to court or directly to bank employees, indicating the violation in the application.

The creditor must be notified of the decision made no later than 30 calendar days before the next payment date. Typically, partial closure of the loan is tied to this date (Article 11, Clause 5 of Federal Law No. 355). Before writing an application for early closure, you should carefully re-read the contract and make sure that the deadline for submitting the application is not shortened by the conditions, and also clarify the method of sending. Perhaps the agreement provides for the transmission of notification not only in person, but also via the Internet.

The borrower has the right to repay the principal and interest in full without notifying the lender about it within two weeks from the date of receipt of the consumer loan. With a targeted loan, the period will be 30 calendar days (Article 11, paragraph 3 of Federal Law-353).

If you do not warn the bank about the early closure of the debt, the deposited funds will not be taken into account as full payment. They will go to the credit account and will be used to write off the next regular payment. This is a common mistake that develops into a serious problem over time.

You need to understand that interest is charged for using money. Even if little time has passed from the date of signing the agreement and full payment, interest will have to be paid if the debt is fully repaid (Article 11, paragraph 6 of Federal Law-353). They will be accrued during the actual use of money, from the moment obligations arise until the day of full or partial fulfillment.

The law gives the bank 5 calendar days from the day the borrower notified about the early closure of the loan to provide data on the amount of the remaining debt and recalculation of interest (11 clause 7 of Federal Law-353).

What if I don’t pay in full?

In case of partial repayment earlier than the deadline specified in the agreement, the borrower is obliged to notify the lender within the time limits established by law.

Making a larger payment will change the loan amount. The bank will offer to repay the remaining amount in two ways, either by reducing the amount of regular payments while maintaining the loan term, or vice versa, by reducing the term and increasing the amount of mandatory payments.

Choosing the right option will depend on the payment plan. For example, with an annuity payment, if the loan was taken out recently, it is more profitable to increase the term and reduce the amount. If the payment were differentiated, then it would be more profitable to do the opposite.

Before accepting one option or another, you need to calculate everything and make a decision based on the data received.

In conditions of high competition between banks, less and less stringent requirements are imposed on borrowers, and almost anyone can afford to take out a loan. However, repaying the loan remains the same responsible matter, and if we are talking about repayment ahead of schedule, then additional nuances arise. In order to pay the bank ahead of schedule on the most favorable terms for yourself, you need to take into account all the nuances of early loan repayment.

Right to early repayment

What is a saving for the client becomes a loss for the bank. Previously, banks charged fees for early repayment, severely limited the amount, and even fined clients for hastily getting rid of debt.

Banks can no longer do this thanks to Law No. 284-FZ, which came into force on October 19, 2011 and amended Art. 809 of the Civil Code. From now on, the right of clients to close loan agreements ahead of schedule is secured. But the best thing is that the norm has a retroactive effect: it also applies to those who managed to take out a loan before the adoption of the amendment.

Banks are adapting to new conditions:

initially set inflated commissions (for example, Home Credit Bank);
establish moratoriums for several months and restrictions on amounts (for example, VTB 24);
charge a commission for recalculating the payment schedule;
deny further loans to borrowers who abuse early repayments (most banks).

Therefore, having a legal right is great, but you need to be able to use it correctly.

Full and partial repayment

Partial repayment

If the client contributes an amount that is significantly higher than that indicated in the schedule on a certain date, but is not sufficient to completely close the debt, then we are talking about partial repayment.

Example. The repayment date under the agreement is October 1, and you still have to pay 6,000 rubles. By August 1, you need to deposit RUB 2,000. on schedule. You can deposit RUB 4,000, ahead of schedule, but without paying off the debt in full.

Due to partial overpayment, the amount of the principal debt is reduced. In this case, the bank revises the agreement depending on the repayment scheme:

Annuity schedule (repayment in equal payments) – the amount of further monthly payments is recalculated downwards. In this case, the payment is reduced only due to the principal debt; commission and interest are not reduced.
Differentiated schedule (repayment in decreasing amounts) – the loan repayment period is reduced.

Full repayment

If the client deposits the amount necessary to repay the loan long before the agreed date, then we are talking about full early repayment. In this case, the client saves significantly on interest, fees and becomes debt-free. This is possible with both annuity and differentiated repayment. To close the debt completely, you need to calculate the required amount and notify the bank of your intention 30 days in advance, and then deposit the money into the repayment account.

When full repayment occurs, two scenarios are possible:

The bank writes off the entire amount of debt from the account and closes the agreement unilaterally. But the client must still go to the branch and get a certificate of no debt in order to protect himself from possible claims.
Having repaid the debt, the client must write a statement and take it to a bank employee so that he can close the agreement manually.

You can find out what scenario is in effect in a particular bank from the loan agreement, from a branch employee or by calling the hotline.

Early repayment rules

Full repayment ahead of schedule is a procedure that requires attention. All details must be clarified with the bank to avoid misunderstandings.

To successfully repay, you should adhere to the following plan:

Warning. You must notify the bank 30 days in advance. For some banks this period may be shorter. You need to find out from the bank or find this information in the contract about when and in what form to fill out an application for early closure of the contract.
Clarification of the amount. The debt must be repaid in full. If you deposit at least 1 kopeck less, the contract will not be closed.
Payment of debt. In most cases, the early repayment date will be considered the nearest date of the next payment. The bank has the right to collect all interest and commissions assigned for payment before this day.
Control. Make sure the bank has written off the debt in full. Take a certificate confirming the absence of debt under a closed agreement. If we are talking about partial early repayment, then in most cases you can simply deposit more than the required amount. However, you should find out the conditions of a particular bank and adhere to them, and also check the statements after each repayment.

Why should you not abuse early repayments?

If a client too often repays a debt ahead of schedule, sooner or later he will be denied another loan. This is especially true for clients who repay loans 2-3 times faster than required under the agreement.

There is a “grey list” in which banks include clients who do not allow them to earn the desired amount, and in the future this may cause a refusal in any bank. Banks are not required to inform clients about the reasons for refusal, which is why this tool is actively used.

Early closure of a loan agreement is the right of any borrower. But in order to use it with maximum benefit, you need to take into account many nuances so as not to harm yourself. In addition, you should not get carried away with early repayments, so as not to deprive yourself of the opportunity to take out loans in the future.

You can use a credit card to repay

Choose from the following list:

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