How is the Loan Early Closure Calculation Performed?

How Does the Loan Early Closing Process Work?

Nowadays, every bank offers loans to its customers, taking into account many types of needs. Paid loans are usually paid monthly, as there is a certain payment period for the loans received. Some customers may choose to close the remaining debt without waiting for the payoff deadline. In case of early closing of the loan, a lump sum payment is paid instead of paying monthly installments.

Customers who want to close the loan early may have to make an approach according to the status of the agreement with the bank from which they received the loan. Some banks offer attractive discounts in response to the desire to close the loan early, while some banks may impose a penalty for closing the loan early. Instead of encountering such situations, it will be more correct to obtain the necessary information from the bank before withdrawing a loan.

People who take out loans have a credit score score in each bank. Since paying off the loan debt early means paying off the debt without delay, the average credit score score is positively affected by this situation. As a result of the transaction, the credit rating score is being upgraded. This process can work positively from the customer’s point of view.

Things to Do If You Want to Close the Loan Early

First of all, the approaches of the bank to close the loan early should be learned. Since each bank has a different policy, it is useful to get information before taking a loan.

• Calculate the information you received in case of early closing of the loan. Then, if you still decide to close it, it will be necessary to share written information with the bank. After sharing the written information, the bank will make calculations about the loan received and the amount payable will be revealed.

• If there has not been a conversation about this issue with the bank from which the loan was received before, a criminal charge may be paid in accordance with the bank’s procedures. But there is no strictly established fee for this issue. The tariff for the penalty fee may vary depending on the type and amount of the loan.

Does It Make Sense to Close the Loan Early?

Sometimes many consumers who take out loans out of necessity think about closing the loan early when they have money on hand or to reduce their risks and debts. In this way, he wants to get rid of interest costs. Is this approach correct? Will it be profitable for you to close the loan early? Of course, this depends on the type of loan, maturity, interest rate, early closure penalty amount and the economic environment at that time!

When you take out a loan, they usually charge you the interest first. The fact that banks charge interest on the money before you makes it a loss when you want to close the loan early. In this case, even if you have the idea of closing the loan early, keep the term long, even if it depends on the type of loan you will withdraw. This condition is important if interest rates do not change. The thing is that if the banks do not raise the interest rate because you took the loan for the long term, if you withdraw it for the long term! you will pay less interest even in three or four installments.
If the penalty for closing your loan early is 1 percent and the interest rate is low compared to the economy, it may make sense not to close it. Especially if you think that interest rates will start to rise, instead of closing early, you can even deposit if necessary. September July to 2018, deposit rates increased by more than 10 percent. If you think that interest rates are around single digits before this period, you can also calculate your potential return opportunity. You can consider such situations.

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