Is it possible to pay off the payday loan in advance ? How does it work? The early repayment of the payday loan allows the financed capital to be repaid to the bank before the contractual maturity. Each borrower can repay in whole or in part residual debt or only in part. Let’s find out all the details!
Mutual early repayment: Regulation
The early termination of the loan agreement for the purchase of the house, for its restructuring or for the purchase of buildings intended for the performance of economic or professional activities by natural persons is governed by the Bersani Law ( Decree No. 7 / 2007 , converted into Law No. 40/2007), which does not require the payment of any penalty if the loan was signed as of February 2007.
While, for mortgages stipulated before April 2007, penalties are provided, whose rates are variable also depending on the type of rate applied to the loan.
Total and partial extinction of the loan
There is talk of partial extinction of the loan when a sum is paid to the credit institution which is subtracted from the residual debt. It is possible to shorten the repayment duration of the installments, maintaining the amount of the loan installment unchanged.
In the case of total early repayment , the loan contract is definitively closed and the residual debt is repaid in a single payment.
When to pay off the mortgage?
It is not always advisable to pay off the loan in advance before its expiry, especially if a French amortization plan has been activated, whose interest must be paid in advance with respect to the principal amount.
Convenience decreases as installments are paid. Therefore, early repayment is convenient at the beginning, when most interest has not yet been paid.
What are the necessary documents?
What are the necessary documents ? Just send the bank a written letter informing you of the intention to pay off the loan in advance of the natural deadline, asking you to calculate the sum to be paid. Remember to attach a copy of the borrower’s identity document and a copy of the tax code.