People who take out a loan usually try to pay it back as soon as possible. Are costs incurred for early repayment of the reminder, or maybe the lender refunds part of them?
Repeated payment is usually associated with accruing criminal interest related to late payment and sending paid reminders reminding you of arrears. When the commitment is consistently unpaid, the case is often referred to the debt collection agency, and what is more, negative traces are created in the credit history / debt registers.
Early repayment – saving for the customer?
On the other hand, it is worth asking what is the situation with early repayment of loans – is it possible and whether it involves additional costs.
Answering this question, it is worth referring to the Consumer Credit Act – there is a provision stating that the customer has the right to repay all or part of the loan before the deadline specified in the contract (applies to consumer credit, i.e. a “payday loan”). On the other hand, the lender is obliged to reduce the cost (proportionally to the time remaining until the repayment date) – this interpretation of the Financial Ombudsman and the President of the OCCP coincides with the provisions of the Act.
In certain cases, however, the lender may reserve a commission for early repayment. Compensation may amount to a maximum of 1% of the loan amount, however, the condition for its calculation is a situation in which the amount repaid before the deadline exceeds 12 times the average wage in the enterprise sector (announced annually by the President of the Central Statistical Office in Monir Polse ). Thus, this provision in practice eliminates the commission collection by companies providing payday loans.
Is it worth paying back?
In summary, the customer can pay off the loan beforehand, obtaining a financial benefit in the form of reimbursement of part of the costs – for details, it is good to ask the customer service directly. Early repayment is one less commitment on the head, as well as additional savings.
However, there is another separate issue, which in the case of payday loans is a very beneficial solution for the client – namely withdrawal from the contract, which is however a topic for a separate article.