It is possible to close the debt arising from the loans collected by the consumers before the due date. This situation is called early payment, and if early payment is requested, the amount that is found by collecting the current installment with the main money debt remaining from the previous payment is required from the installment to be paid.
In this case, due to no interest added to the remaining monetary debt, the total amount of discounts occurred, but this is not a discount for the bank, but a discount for the consumer. The bank will not allocate only the interest it will allocate. However, in some cases, it may also be possible to allocate a payment called an early payment penalty.
What is the Early Payment Penalty?
The reason for the monthly maturity of the banks is that no loss of income is allowed in the interest account. In other words, the payment of more than one installment within one month will decrease the interest rate of the bank for 1 month since it will decrease the future installment payment. In order to prevent this, the bank collects an early payment penalty in case of interim payments and early payments made on housing loans.
A common mistake is that early payment penalties for vehicle and consumer loans are also imposed. There is no early payment penalty for consumer and vehicle loans, only the early payments for housing loans are fined.
Consumers who want to pay their needs and vehicle loans early can pay discount directly without encountering any penalty payments.
Is the Early Payment Penalty Legal?
The early payment penalty is legal in order to protect the bank’s profit, but how much the penalty can be imposed is determined in accordance with the Consumer Protection Law and the Housing Financing Agreement Regulation.
Pursuant to Article 37 of the Law on consumer protection, “Early payment compensation cannot be more than 1% for loans that do not exceed thirty-six months, and 2% for loans whose remaining due exceeds thirty-six months after calculating the amount of early payments made with interest rate cuts. “
How is the Early Payment Penalty Calculated?
After learning how many installments of the housing loan remained and the remaining principal debt is less than 36 months, 1% early payment penalty is paid, if there are more than 36 months, 2% early payment penalty is paid.
Sample Early Payment Penalty Calculation
In the event that the consumer uses a 120-month housing loan and wants to pay the remaining 50 thousand USD main currency debt within the 100th month, the early payment penalty amount will be 500 USD. The remaining number of installments is 20 and 20 is a term of less than 36. Therefore, an early payment penalty of 1% of the remaining principal debt should be paid in accordance with the legislation.
In case the consumer uses a 120-month housing loan and wants to pay the main debt of 120 thousand USD in the 60th month, the amount of the early payment penalty to be paid will be 2400 USD. There are 60 installments left and 60 is larger than 36 months. Therefore, it will be necessary to settle for an early payment penalty of 2% in accordance with the legislation, which corresponds to 2400 USD.