Would you like to take out a loan with a special repayment? Are you still undecided what the special repayment right should bring you?
We will show you, through authentic information, why the right to free special repayment is important to you. A lender’s concession to accept free special repayments is not a worthless “give away” to visually improve a loan offer.
Special repayment loans – more than a brisk slogan
For many people, the offer for a loan with a special repayment looks like a brisk advertising slogan at first. It is not uncommon for the right to free special repayment to be confused with the legal right to early loan repayment. In Germany, every consumer borrower has the right to fully repay his loan early.
Penalty interest (prepayment interest) for early loan repayment has been significantly curtailed by the legislature. Credit institutions may still claim a maximum of one percent of the transfer fee as compensation for early loan repayment. This common confusion would overlook the fact that special repayment is not synonymous with early loan repayment.
A loan with a special repayment when the borrower makes additional payments is repaid faster. But, the amount of the special repayment does not have to be so high that the existing loan could be repaid in one go. To be able to make special payments free of charge and in any amount corresponds to the offer to make fixed installment payments more flexible. This means that small installments do not have to degenerate into endless terms.
Small installments – repay your loan quickly
Any credit planning is faced with the challenge of measuring the installment payments in such a way that the fixed rate can be paid on time. The smaller the agreed rate, the easier it will be to stick to the punctual payment. However, credit with small installments has the disadvantage that the repayment takes longer. Nobody wants to pay endlessly, so borrowers often “sew their loan on edge”.
They firmly agree on the maximum rate that the household budget can currently afford. In this way, they hope to be “off” from the loan in the shortest possible time. The risk with this approach is that nobody can safely look into the future. Unexpected costs can overload the tightly planned budget. The installment loan model does not allow you to flexibly pay back less money once for three months.
Flexibility to be able to pay the installment on time even with a tight budget creates credit with special repayments and small current installments. The possibility of free repayment counteracts the goal of getting rid of the loan obligation as quickly as possible. Instead of agreeing a high fixed rate, the right to free repayment and a low rate is used. Regular special repayments ensure quick repayment.
Use the loan model for yourself – practical tips
The low rate leaves more money in the household budget, but from the current perspective, higher repayments would be possible. This “freely available money” initially goes to a savings book by standing order. Leaving it in the checking account only leads to desires. If there is a “descriptive buzz” on the page, the time comes for the special repayment. The savings book is emptied in favor of the loan.
Another advantage of combining credit with special repayment with the savings book is shown when unexpectedly high costs burden the household budget. At this moment, the savings rate could be suspended for a while. Then repayment is not so quick, but financial turbulence loses its terror. In cases where additional credit would otherwise have to be taken out, for example an expensive repair, the savings book serves as a buffer.
Instead of overdrawing the current account or taking out an additional installment loan, money is simply transferred from the savings book. If the monthly installments are small enough, credit with free special repayment even offers a good alternative to credit insurance. The savings volume for the insurance premium, around 10 percent of the loan amount, is better invested in additional repayment.
Who offers free special repayment on installment loans?
For credit comparison, free credit comparison calculators open up more options than just comparing interest rates. It is not uncommon to see on the overview page which provider offers the loan with a special repayment.
If there is no information on the screen of the overview list, the data is hidden in the loan terms. For borrowers who want to use all the advantages of modern loan offers, the “extra click” is worthwhile to see the conditions.
Conclusion – the most important thing in brief
The right to free special repayment goes far beyond the legal requirements for loan repayment through one-off special repayment. Loans with special repayments make installment loans more flexible in such a way that quick repayment and small ongoing installments do not conflict. Thanks to the flexible special repayment, each borrower remains the “host” of his personal budget.
Instead of a fixed high credit rate, he only has to make small monthly payments. Nevertheless, he is free at any time to use his money for the repayment anyway. If the difference to the maximum possible rate load were saved through a savings book, this money creates additional financial freedom. In months with a tighter household budget, the savings would simply be suspended. Dispo due to the additional expenses would be avoidable.
If there were unexpectedly high additional expenses, the savings could prevent additional loan requirements through rebooking. Well calculated, even credit insurance for loans with special repayments would be superfluous without risk. Because, the binding rates are so small that they always fit into the budget.