When you take a consumer credit you may have the thought of wanting to cancel it as soon as possible, however, in order to do so you must first take into account various factors. In this article we will know if it is possible to prepay a consumer credit , what are the associated costs and when it should be done.
Can I prepay a consumer credit?
When a consumer credit is acquired, it is possible to make extraordinary payments to the debt or make full or partial prepayments.
Prepayment is the prepayment of the total or partial amount of a debt owed to a bank or financial institution. It is an inalienable right of the credit debtor. The main benefit of prepayment is that the client must pay interest only until the date of prepayment.
If the consumer credit is less than 5,000 dollars, the debtor can prepay, provided that the respective prepaid commission pays and that the amount is not less than 20% of the obligation, even against the will of the creditor. In cases where the above conditions are not met, prepayment will require the consent of both parties, creditor and debtor.
All the details and clauses about the early cancellation or prepayment of the credit will be provided in the contract signed with the financial entity, so it is advisable to read these clauses in detail before making the prepayment.
What are the prepaid costs of a consumer credit?
When a prepayment of a loan is made, the amount of which exceeds 5,000 dollars, in addition to the capital, a prepaid commission must be paid , whose value corresponds, at most, to:
- One month of interest for non-adjustable operations (loans in pesos)
- A month and a half of interest for resettable operations (credits in dollars)
In both cases the interest calculation is done considering the capital that is prepaid.
Thus, when making prepayment , the following will be paid:
- Capital that has not yet been paid
- Interest accrued up to the prepaid date.
- Prepaid Commission
Keep in mind that if you cancel the debt in advance, you have the right to a refund of the compulsory insurance premium, such as the deduction insurance, provided you pay within the first tenth of the loan period, or, 45 days after requesting it.
When should a consumer credit be prepaid?
There is no single point of view based on which it is possible to determine whether or not to prepay a consumer credit , but there are several factors that need to be taken into account:
- In the first place, when interest rates fall, a good opportunity arises to request a new loan, prepay what you had and keep a new obligation but paying lower interest.
- Experts recommend that the advance be made in the first stage of the debt. When the end of the credit period is approaching, it is not convenient to prepay because it is very possible that at that point of time it is already only paying off the debt.
As you have seen, making the prepayment of a consumer credit is possible, but it is not convenient in all cases, but it will be necessary to attend to the period of time and interest rates. Remember that in the next post you can check which are the best consumer credits: Best consumer credits