A loan should usually help you to fulfill a dream or to survive a problematic phase in which the money is lacking, for example, to replace a defective washing machine. From time to time, however, you will unexpectedly receive money (inheritance, gift, tax) or find a cheaper loan and therefore want to cancel the original installment loan. The most important word here is special repayment.
Cancel installment: The procedure
In the banking system, an installment loan can usually only be terminated in one way: through special repayment. This clause is included in each loan agreement and allows you to prepay a portion or the entire contract early. This is the loan repaid, so the loan is terminated in this way. It should be noted, however, that special repayments are not necessarily free of charge (they are usually associated with costs) and may not necessarily occur at arbitrary times, but have fixed dates in credit agreements on which they must be made.
Cancel installment loan: the financial bottleneck
Some people want to cancel the installment loan, because they simply can not pay the current installments. However, they do not have the money to repay the loan early. Those who want to terminate their installment loan have two options: Either they find a better loan offer and reschedule debt (often arrangements can be found in consultation with the bank) or they go into private bankruptcy and apply for bankruptcy protection. Other ways to terminate the installment loan, they do not exist.
When is the termination of the installment loan worthwhile?
For the people who want to replace the loan by means of the special repayment, because they have come to money by other means, it is important to note what they really cost the special repayment. The goal is known to save money. Costs the special repayment a fee you lose twice the money, because the sum that one uses for special repayment, you can not invest more profit. The interest savings resulting from the special repayment must therefore be higher than the processing fee and the interest loss due to the non-invested money together. Only then should one consider to terminate his installment loan prematurely.