As a borrower, you have the right to repay all or part of the loan before the deadline specified in the contract. What’s more, you don’t have to notify the bank about this intention in advance.
There are also additional benefits to early repayment of consumer or cash loans. In the remainder of the article, we will show you what rules you can refer to when dealing with a bank, and we’ll explain what a refund of the loan commission is and what other rights you have in relation to early repayment.
What is the commission?
Banks, despite the fact that they do not have full freedom of action (restrictions are introduced by the Banking Law), they are entities conducting business activity. This means that the services offered – including loans – must be profitable.
Therefore, the customer who concludes a loan agreement should not only take into account the necessity to return the funds made available to him by the bank, but also to pay interest on these funds and to incur other costs of the loan, such as :
- insurance costs.
The commission is a fee which is to compensate the bank for costs related to:
- credit application consideration,
- granting a loan,
- loss of interest in the event of early repayment of the loan.
What is a loan commission refund? What does it consist of?
As we mentioned in the introduction, you can – without informing the bank first – pay off the loan in whole or in part before the date of the contract. This is stated in art. 48 paragraph 1 and 2 of the Act of May 12, 2011 on consumer credit (i.e. of May 16, 2019, Journal of Laws, item 1083). What’s more, you have the right to a refund of commission and other loan costs in an amount directly proportional to the period from the date of early repayment to the day on which you should pay the last installment of the loan.
Article 49 1 of the Consumer Credit Act, which we referred to above, applies even if you have already incurred these costs (e.g. commission). If you have made partial repayment of the loan only in part, you are also entitled to a refund of commission and other loan costs – calculated in proportion to the period by which the loan repayment time has been shortened. Such a provision is in art. 49 paragraph 2 of the Consumer Credit Act.