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- Repayment without sanctions: Russians can repay the loan ahead of schedule at any time
Repayment without sanctions: Russians can repay the loan ahead of schedule at any time
Under Russian law, the borrower has the right to repay the loan ahead of schedule, including immediately after its completion. This rule applies to loans taken out for personal, family or household purposes. At the same time, banks cannot prohibit a client from returning money ahead of time or impose fines for such a decision. For more information about how early repayment of loans works and what nuances are important for borrowers to consider, see the Izvestia article.
Is it possible to repay the loan immediately after registration
The right to early repayment of the loan is stipulated in Federal Law No. 353 "On Consumer Credit". According to current regulations, the borrower can return the money to the bank ahead of time, either partially or completely.
As Olga Vyalshina, head of the Roskachestvo Center for Financial Expertise, explained, in the first days after receiving a loan, there is a so-called grace period.
— According to the current legislation, the borrower has the right to repay the entire loan amount without prior notification to the bank within 14 calendar days from the date of receipt of funds. For targeted loans, this period is 30 days. In this case, interest is paid only for the actual period of use of the money," she noted.
After this period, the borrower can also repay the loan ahead of schedule. However, in such a case, the law may provide for the need to notify the lender of its intention in advance, usually 30 days in advance, if a shorter period is not specified in the loan agreement.
Can banks limit early repayment
Sometimes credit organizations try to introduce the so-called minimum term of use of the loan, during which the client allegedly cannot close the loan. However, such restrictions do not comply with the law.
— It is illegal for banks or microfinance organizations to introduce minimum terms during which it is prohibited to repay a loan. The creditor has no right to impose fines, commissions or other sanctions for early repayment of funds," Vyalshina emphasized.
According to her, any terms of the agreement that limit the borrower's right to repay money ahead of time can be challenged in court or through a complaint to the supervisory authorities.
When the bank may require repayment of the loan ahead of schedule
The right to early repayment may arise not only from the borrower, but also from the bank. This happens in case of serious violations of the terms of the loan agreement.
For example, a creditor may demand repayment of the entire debt if the client systematically makes late payments. For consumer loans with a term of more than 60 days, this is possible if the total delay exceeds 60 days in the last 180 days. For loans of up to 60 days, the reason may be a delay in payment of more than 10 days.
At the same time, the borrower must be given time to repay the funds. For loans with a term of more than 60 days, repayment is given at least 30 days, for short—term loans - at least 10 days.
In the case of a mortgage, the bank may also require early repayment of the loan if the borrower does not make payments for more than three months, does not extend the mandatory insurance of the collateral, or if the collateral has been lost or significantly lost in value.
Is it always beneficial to close a loan early
The benefit of early repayment depends primarily on the interest rate on the loan and alternative ways of using available funds. The borrower pays interest to the bank for each day of using the money. The higher the loan rate, the greater the overpayment and the more you can save on early repayment.
However, experts recommend focusing not only on the interest rate, but also on the full cost of the loan, which is specified in the contract. For example, if the full cost of the loan is 17% per annum, and the available money can be placed on a bank deposit at 13% per annum, repayment of the loan will be a more profitable solution. In this case, the borrower pays the bank more interest than he could earn on the deposit. This applies to both full and partial early repayment of the loan.
What needs to be done after the loan is fully repaid
After the loan is fully repaid, it is important to make sure that the bank has closed the obligations and transmitted the correct information to the credit bureaus.
— After making the last payment, you need to get a certificate of full loan closure. This is the main document confirming the absence of claims from the bank," Vyalshina explained.
The expert also advises checking whether the credit account is closed. Sometimes the loan is considered repaid, but the account remains active, and fees may be charged for its maintenance. In addition, 10-14 days after the loan is closed, it is recommended to check your credit history and make sure that the bank has provided the correct information to the credit bureau.
If, when applying for a loan, the borrower entered into a life or health insurance contract, he also has the right to refund part of the insurance premium for the unused period after early repayment of the loan. Following these rules helps to avoid possible disputes with the bank and protect your credit history in the future.
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