The possibility of early repayment of the loan occurs at the borrower with the advent of the amount of money, which is either completely extinguished by the body of the loan or partially. Few understand the process of recalculation of interest after early repayment. But this information will help navigate the debtor on the loan in the future action plan.
There are two types of early repayment of the loan: full and partial.
Full repayment of the loan implies payment of the entire amount of debt on the loan. Many do not consider this opportunity necessary, so they continue to pay a loan according to the payment schedule. But what is important to know about early repayment is the benefit that you get in the form of a reduction in the loan overpayment in general.
Therefore, sometimes it is more profitable to make an additional amount of money together with a monthly payment, which does not hit the pocket. Thus, you partially extinguish a loan. The Bank may offer to reduce the amount of the monthly payment or the term of the loan agreement.
With full early repayment, the percentage is calculated to the real date and the nearest payment. In the case of partial repayment, the percentage calculation depends on the type of payment: annuity or differentiated.
With the annuity form of a monthly payment, the borrower pays the same amount every month, but the payment itself at the beginning of the credit path covers most of the percent and less part of the principal debt. Thus, the Bank guarantees the return of interest on the loan.
To repay a loan with such a type of payments is more profitable at the beginning when the borrower is just starting to pay the first payments, then with partial repayment, their size will decrease or the bank to propose to reduce the term of the loan agreement.
With full repayment for some time until the end of the loan agreement, the borrower will get rid of the loan faster and slightly reduce the overpayment of the bank.
With a differentiated method of payment, the borrower can repay the loan ahead of time at any time. In this case, the recalculation of interest will be made in proportion to the residue of the debt.
The issue of recalculation of interest on the loan in case of early repayment has a high relevance among citizens, as it requires a large number of factors that affect the refund.
Usually banks prescribe the conditions for early repayment, familiar with whom, the borrower will be easier to understand what he can count on.