To date, quite a lot of people have come across bank loans. When applying for a loan at a bank, many are reinsured and take a repayment term sufficiently large. In reality, it often turns out to pay the whole loan much faster, but it becomes clear that the bank received too much from the borrower during the payment. Is it possible to repay interest on a loan at an early repayment? This issue should be considered in detail.
The ability to return interest
Often financial institutions immediately prescribe in regular payments additional commissions that are not related to the payment of the debt itself or charges on it, so returning these funds becomes problematic. The repayment of interest paid upon early repayment of the loan is only realistic if the appropriate application is duly filled out and the loan is paid in full.
Given these factors, you should pay attention to other conditions of the loan agreement. So, in a written agreement, it may generally be indicated that it is impossible to repay a loan ahead of schedule for a certain period of time.
Also:
- each financial institution has specific conditions for premature repayment;
- even in case of early repayment, the borrower is obliged to pay monthly installments until the full payment is confirmed.
What can I get my money back for?
Refund of overpaid interest upon early repayment of a loan is not the only amount of money that a bank client is entitled to receive from an organization if the debt is prematurely closed.
Among them:
- commission for servicing and opening an account (if the borrower did not sign the agreement);
- loan commission (if the borrower did not sign the agreement);
- insurance payments, if the contract for them has not been issued;
- actually overpaid interest on the loan;
- other hidden additional fees.
The most common type of monthly payment
According to this type of settlement with a financial institution, an individual or legal entity undertakes to pay a regularly fixed amount. It includes both payments to pay off the debt itself, and payments on interest and other fees. Such payments are called annuity, interest repayment for early repayment of the loan in this case is most relevant.
The thing is that such payments at the very beginning of the period contain most of the interest, and not the debt itself. It turns out that with mortgage lending for decades, the first couple of years, the borrower makes almost one percent, leaving the debt itself outstanding.
It is also important to know that for the correct calculation of interest on an annuity payment a special formula should be applied, but many banks simply divide the annual percentage by 12 and give out the result for monthly obligations, which in reality exceed the actual figures by several points.
The annuity myth
Many are of the opinion that the repayment of interest on a loan upon early repayment will be most significant when paying a loan with fixed payments. The fact is that in such payments the amount is paid to pay off all charges, which is also supported by the courts. This is actually not the case. Upon a detailed consideration of the calculation of the annuity payment for each payment period, it becomes clear that the calculation of interest is carried out separately for each last month of using money. That is, there is no overpayment of accruals in advance in this form of payment.
Early repayment rules
From the point of view of cash settlements, repayment of interest on a loan upon early repayment is a complex and painstaking task, but considering the possible amounts of the amounts received back, the process is worth it. To maximize the likelihood of approving a refund request, you must strictly follow all the conditions for premature repayment. Initially, it is necessary to warn the credit institution in advance about the desire to pay off their debt ahead of schedule. It is best to do this in writing or online, if the bank has such an opportunity. After that follows:
- deposit the required amount to the organization’s account, while receiving a receipt;
- receive written confirmation of full repayment of the debt and the absence of obligations to the bank.
The latter can be completed only one month after the full amount has been paid directly to the financial institution.
Given the terms of the contract, after all of the above actions, you can file a claim for the return of overpaid funds. First, to a credit institution, and then in case of refusal to court.
Legal issues
Early repayment of a loan, repayment of interest, judicial practice, as a rule, is considered on the basis of various information letters from higher judicial instances. Upon their conclusion, interest on loans is considered fees for the use of funds, which means that they should be paid to a credit institution only for the period during which the money was at the disposal of the bank's client. Thus, the requirement to pay accruals for the period when the loan has already been repaid, including prematurely, is illegal.
It is also important to know that even if the text of the agreement between the bank and the client contains a ban on the return of interest, the credit institution will still be obliged to return the funds with a corresponding statement under the law. In addition, the financial institution is obliged under any circumstances to recalculate the funds deposited in case of early repayment of the debt.
Given these legal nuances that work on the side of the borrower, it is safe to practice litigation with credit organizations regarding the repayment of overpaid funds.
How to determine the amount of overpayment?
Repayment of interest on an early repayment loan can be calculated in two ways. More painstaking is the calculation by determining the difference between the two annuity flows. Thus, the borrower must determine the difference between the current terms of the annuity for the current term of the loan and those conditions that could have appeared to him when applying for a loan immediately for a shorter period in which an early repayment is made. This type of calculation is rarely taken into account by lawyers and can only be relevant if there is a regional judicial practice under these conditions.
Most often, the calculations are made in a simplified way, which is also taken into account by lawyers. It includes a proportional calculation of accruals for the duration of the contract. To do this, calculate the volume of all interest calculated over the term of the agreement.
Thereafter:
- calculate the loan maturity and accrued payments;
- divide the amount of all interest by the loan term and multiply by the number of payments already paid.
The result of the calculations will be the amount that should have been paid for the period of use of bank funds. The difference between the real number and the one received in the calculations is an overpayment that can be requested from a credit institution. In order not to make mistakes in self-calculations, you can use the loan calculator, which is available in the public domain.
Return Nuances
Independent calculations are not always accurate, as bank employees may additionally include additional payments unaccounted for by the borrower. So, interest repayment for early repayment of a mortgage loan can be carried out according to other calculations, in which the independently calculated amounts will be only approximate.
It is important to understand that it is impossible to repay interest for the period when the borrower used the money, because this amount is paid to the bank and is protected by law on the side of credit organizations.
When taking into account all of the above, one should not rush into calculations, but determine whether the contract even has the possibility of premature repayment of the debt.
Sequencing
Early repayment of a loan at Sberbank, the return of interest on which can also be carried out according to the law, must take place in accordance with all the conditions of the contract. Otherwise, the bank may turn the situation in its direction, therefore, before starting any trial, it is better to consult a qualified specialist and get acquainted with the results of court proceedings of other persons.
After this, it is necessary to prepare a written statement to the court. According to the law, if the amount of the claim exceeds 100 thousand rubles, then the application should be considered already in the district offices. You should also pre-warn the credit institution of the intention to file a lawsuit. In some cases, banks agree with the claims of the borrower, and all issues are resolved without the involvement of the courts.
Application Rules
Early repayment of a loan at Sberbank, repayment of interest more precisely, is carried out when preparing an application in a form fixed in the organization. In some cases, unscrupulous employees may simply refuse to issue the necessary form to the client, and then the application can be written in free form. If, however, the acceptance of such an application is also refused, it is necessary to turn to the management and ask for a copy of the application they have received, with a note on its acceptance and date.
In order to repay interest upon early repayment of the loan, the application must contain:
- passport details of the applicant;
- all data on the concluded loan agreement;
- account number to which the overpayment will be transferred.
A copy of the loan agreement must also be attached to the application. An application is usually considered for at least three days.
Refund of Additional Payments
In addition to the overpaid interest, borrowers often find among the services they pay that they do not use at all and did not sign at all.
These include:
- mobile bank;
- insurance premiums and so on.
Services imposed by the bank can be canceled at any time, upon the borrower's application, and if their payment has been included in monthly installments, the bank is obliged to recalculate and, if necessary, return its funds to the client.
It is important to know that even with the unconscious use of services, you will have to pay for some time. Also, certain types of commissions are not subject to cancellation - the fee for issuing a loan and servicing an account, since the conditions are standard for all types of contracts.
Conclusion
Be sure to contact the bank for financial assistance, read its terms. Early repayment of a loan, interest repayment, annuity payments, refund of additional payments - these are all quite complex concepts that should be carefully understood. Of course, taking into account the probable size of the amounts received, the process is fully justified.