Did you use a credit redemption and you now have the option of prepaying all or part of what you owe? That’s a great idea. But under what conditions is it possible? Similarly, what are the fees that are related to such a procedure?
Early repayment of a credit surrender, under which conditions?
Under Article L311-22, it is possible for any borrower to prepay, on his own initiative, his credit. This early repayment may concern part or all of the amount due. In the context of a credit redemption, however, this provision is only valid in the case of a consolidation of consumer credit. In other words, the repurchases of mortgage loans can not be the object of an early repayment. However, in the context of a “mixed” loan buy-back, integrating both consumer and real-estate loans, early repayment is possible.
How much does it cost?
Contrary to the initial provisions of Article L311-29 of the Consumer Code which provides that the early repayment may be made without compensation, the early repayment of a purchase of consumer credit may incur costs. Indeed, in accordance with the Lagarde Law of May 1, 2011, the bank may require early repayment penalties corresponding to the shortfall related to interest that will not be collected. These penalties can, however, only be applied to depreciable credits and above 10 000 euros of prepayment per one-year period. In addition, these penalties are not applicable when the early repayment concerns variable rate loans.
In practical terms, Early Redemption Payments (ARIs) for a consumer credit are negotiable. They generally vary between 0.5 and 1% of the credit amount and can in no case exceed 3%.
It should be noted that the amount of these penalties must be fixed at the signing of the loan agreement and must therefore be clearly stipulated at the beginning of the credit repurchase procedure.
So you’re better informed about the prepayment procedure for a credit redemption. Before you start, take advantage of our online loan pooling simulator and get a better idea for your personal situation.