Consumer loans in Austria can in principle be repaid in whole or in part at any time before the agreed term expires.
Since banks, savings banks and other lenders miss out on future income if they are repaid early without an important reason, they may be entitled to compensation for unscheduled repayment – the so-called early repayment penalty. This fee varies depending on the interest rate, the digit loan amount and the remaining term of the loan.
Prepayment penalty depending on the type of loan
First of all, the amount of the possible prepayment penalty depends on the type of loan and the contractual agreements. In Austria, the prepayment penalty usually does not play a role for borrowers with a traditional consumer loan.
Exception in Germany: In contrast to the banks in neighboring Germany, this is not calculated for an installment loan – the borrower only has to take the three-month notice period (under certain circumstances even with a six-month notice period) into account in order to obtain a new loan, a better monthly rate and to obtain favorable terms from another bank and good creditworthiness.
Loans with a variable interest rate can in principle be repaid early at any time without additional costs. Modern online loans also allow numerous special repayments and early repayment, as a rule, completely without additional expenses.
If, however an agreed fixed current interest rate of their loan, can annually usually only a certain agreed amount at no extra cost to be paid back prematurely. If the early repayment or a special repayment exceeds this amount, the bank may demand a prepayment penalty from the borrower. However, this “penalty” is limited to a maximum of 1 percent of the credit’s remaining debt.
Important for consumers: The compensation must never exceed the amount of the remaining interest that the borrower would have to pay up to the originally agreed term of the loan. If your loan contract contains incorrect cancellation instructions, legal steps are possible here.
A prepayment penalty with high prepayment interest is very popular, especially with older long-term mortgage loans. Ultimately, the contract is mostly about high residual amounts and long terms for early repayment, with which the banks calculate firmly in the budget of the cash register. A default, if you cancel and terminate the loan contract, is usually expensive.
Non-acceptance compensation: If the contractually agreed loan has not yet been paid out, this is referred to as a non-acceptance compensation. Incorrect cancellation instructions in the loan contract must always be observed and terminated.
Prepayment in mortgage lending
The subject of prepayment for building loans is a special feature in Austria. Above all, building interest for the property has literally sunk in the basement in recent years. Many property owners who have financed their existing loan years ago, therefore, have to pay significantly higher monthly installments without low-interest rates than those who have only recently realized their new property with mortgage lending. But the temptation to quickly refinance your property without calculation also harbors risks.
When reorganizing a building loan – for example through a house sale or a better forward loan – builders must, therefore, count on a pointed pen. If the current bank or savings bank is entitled to a prepayment penalty, this amounts to between two and ten percent of the remaining loan debt in the case of building finance in Austria.
Since real estate buyers usually prefer the longest possible commitment, considerable sums quickly accumulate with a remaining debt of USD 100,000, which cannot always be outbid even with the interest savings of a currently very cheap mortgage loan.
Banks must not arbitrarily raise their prepayment penalties. For the calculation, the saved administrative costs, the saved costs of the risk default as well as the current interest rate, which financing would throw off in the corresponding period, have to be deducted from the loss, which results from a non-collected interest in the case of premature termination of the loan for the bank. This is easily the case with a prepayment calculator.
What is the best way to calculate my prepayment interest?
Many consumers are faced with this question before repaying their debt or rescheduling. Of course, this can be done by the current credit or bank advisor. Borrowers can also conveniently determine this themselves at any time in a few steps using a modern prepayment penalty calculator:
- Enter the current remaining debt of the loan on the calculator.
- Select the duration of the remaining fixed interest rate on the calculator.
- Add the contractually agreed interest rate on the calculator.
Basically, several factors are decisive for the exact calculation of the prepayment penalty for the prepayment penalty calculator: This depends heavily on the current remaining debt of the loan, remaining debit interest and the agreed credit or mortgage interest are also decisive. In addition, there is the fact of the bound borrowing rate at which the bank can currently invest the repaid money.
Important for the calculation: You will find all the necessary information on the calculation in the prepayment penalty calculator in your current loan contract – if necessary, the bank must provide you with additional information.