Solvent borrowers often want a loan with a special repayment because, in addition to paying in installments, it also offers the option of repaying the loan faster. If there is a desire to use a loan with a special repayment, this must be agreed with the bank in advance.
If the request is not addressed, the special repayment is not automatically entered in the contract. The lender agrees a term with the bank, which is set. With a special repayment, this term can be shortened automatically, with the excess interest being paid out at the end.
Shorten the loan term
Anyone who applies for a loan with a special repayment can shorten the loan term considerably. The borrower can then decide for himself whether the monthly installments will remain the same or be reduced. If the rates remain the same, the term will be shortened. If the rate is reduced, the monthly charges are lower and the term remains the same.
Does this loan make sense?
It always depends on what is to be achieved in order to be able to decide whether a loan with a special repayment makes sense or not. Many take their savings so that they can make the special repayments. A long term is chosen here, with the credit rates being very low. Each month, the borrower can decide for himself whether he will only pay the installment or pay more money. However, this is only worthwhile if the bank also calculates the interest, which is then paid out in the end. However, if the bank does not calculate the interest back, a loan with a special repayment is not worthwhile.
No interest is saved and the term does not change. Every loan has a minimum term that is adhered to. When this has expired, the borrower can also choose to repay the loan and repay it in full. In this case there is a special form of special repayment, since the entire loan is paid off with a sum. The advantage is that, in this case, the excess interest is always reimbursed.