Repayment of interest on a loan with early repayment: case law

To date, quite a lot of people have faced bank loans. Making out a loan in a bank, many are reinsured and take a repayment period sufficiently large. In reality, it often turns out to pay the entire loan much faster, but it becomes clear that during the payments the bank received too much from the borrower. Is it possible to repay interest on a loan with early repayment? This issue should be considered in detail.

Possibility to return interest

Often, financial institutions immediately register additional commissions in regular payments that are not related to the payment of the debt itself or accruals on it, so it is problematic to return these funds. Repayment of interest paid on early repayment of a loan is only realistic if the relevant application is duly executed and the loan is paid in full.

Given these factors, you should pay attention to other terms of the loan agreement. So, in a written agreement it can generally be stated that repaying a loan ahead of schedule is impossible within a certain period of time.

Also:

• Specific conditions for premature repayment of each financial organization;
• Even in case of premature repayment, the borrower is obliged to pay monthly installments until the full payment is confirmed.

What can I get my money back for?

Repayment of overpaid interest for early repayment of a loan is not the only amount of money that a bank customer is entitled to receive from an organization in the event of premature closing of a debt.

Among them:

• Commission for service and opening an account (if the borrower did not sign the agreement);
• Commission for the execution of a loan (if the borrower did not sign the agreement);
• Insurance payments, if the contract on them has not been issued;
• Actual overpaid interest on the loan;
• Other hidden additional commissions.

The most common type of monthly payments

According to this type of calculation with a financial institution, a natural or legal person undertakes to pay regularly a strictly fixed amount. It includes both payments on repayment of the debt itself, and payments on interest and other charges. Such payments are called annuity, the return of interest on early repayment of the loan in this case is most relevant.

The thing is that such payments at the very beginning of the period contain most of the interest, not the debt itself. It turns out that with mortgage lending for tens of years, the first couple of years the borrower contributes almost one percent, leaving the debt itself unpaid.

It is also important to know that a special formula should be used to correctly calculate interest on annuity payments, but many banks simply divide the annual interest by 12 and give out the result for monthly obligations that actually exceed the actual figures by several points.

The Myth of the Annuity

Many are of the opinion that the repayment of interest on the loan for early repayment will be the most significant when paying the loan is fixed payments. The fact is that in such payments a sum is made to pay off all accruals, which is supported by the courts. In fact, this is not so. With a detailed consideration of the calculation of annuity payments for each payment period, it becomes clear that interest calculation is carried out separately for each last month of using money. That is, there is no overpayment of charges in advance in this form of payment.

Rules of premature repayment

From the point of view of monetary calculations, repayment of interest on a loan for early repayment is complicated and painstaking, but considering the possible amounts received back, the process is worth it. That the probability of approval of the application for a refund is the maximum, you should strictly follow all conditions of premature repayment. Initially, it is necessary to warn the credit organization in advance about the desire to repay its debt ahead of schedule. It is best to do this in writing or online, if the bank has such an opportunity. After this, you should:

• Make the necessary amount to the account of the organization, having received a receipt at the same time;
• Receive a written confirmation of the full repayment of the debt and the absence of obligations to the bank.

The latter can only be done a month after the entire amount is paid directly to the financial institution.

Given the terms of the contract, after all the above actions, you can file a claim for the return of overpaid funds. First, to a credit institution, and then to refuse to go to court.

Legal Issues

Early repayment of the loan, interest refund, court practice, as a rule, considers on the basis of various information letters from higher courts. According to their conclusion, interest on loans is considered a payment for the use of funds, and therefore, must be paid into the credit institution only for the period in which the money was available to the client of the bank. Thus, the requirement to pay accruals for the period when the loan has already been repaid, including prematurely, is illegal.

It is also important to know that even if the prohibition on the return of interest is prescribed in the text of the agreement between the bank and the client, the credit organization will still be obliged to return the funds with the corresponding application under the legislation. In addition, the financial institution is obliged, under any conditions, to recalculate the funds deposited with the early repayment of the debt.

Given these legal nuances working on the side of the borrower, you can safely practice litigation with credit organizations on the return of overpayments.

How to determine the amount of overpayment?

Repayment of interest on a loan for early repayment can be calculated in two ways. More painful is the calculation through the definition of the difference between two annuitant flows. Thus, the borrower must determine the difference between the current annuity conditions at the current time of loan registration and those conditions that could have been presented to him when the loan was issued for the shortest period in which the early payment is made. This kind of calculation is rarely taken into account by lawyers and can only be relevant if the regional court practice is based on these conditions.

Most often, the calculations are made in a simplified way, which is also taken into account by lawyers. It includes a proportional recalculation of the accruals for the term of the contract. To do this, calculate the volume of all the percentages calculated for the term of the agreement.

After that:

• Calculate the maturity of the loan and already paid accruals;
• The amount of all interest divided by the loan period and multiplied by the number of payments already paid.

The result of the calculations will be the amount that should be paid for the period of use of bank funds. The difference between the real number and the amount received in the calculations is the overpayment that can be demanded from the credit institution. In order not to make a mistake in independent calculations, you can use a credit calculator, which is available in free access.

Nuances of return

Independent calculations are not always accurate, since bank employees can additionally include additional payments not taken into account by the borrower. So, the refund of interest for the early repayment of a mortgage loan can be made by other calculations, in which the independently calculated amounts will be only approximate.

It is important to understand that it is impossible to return interest for the period when the money was used by the borrower, since this amount is payment to the bank and is protected by law on the side of credit institutions.

When taking into account all of the above, you should not hurry with the calculations, but determine whether there is in the contract in general the possibility of premature repayment of the debt.

Sequencing

Early repayment of a loan in Sberbank, the return of interest on which can also be carried out under the law, must pass under all the terms of the contract. Otherwise, the bank can turn the situation in its favor, so before starting any trial it is better to consult with a qualified specialist and familiarize yourself with the results of other people's trials that have already been carried out.

After this, it is necessary to prepare a written application to the court. According to the law, if the amount of the claim exceeds 100 thousand rubles, then the application must be considered already in the district offices. Also, the credit organization should be warned in advance about the intention to file a claim with the court. In some cases, banks agree with the borrower's claims, and all issues are resolved without the involvement of the courts.

Rules for drawing up an application

Early repayment of a loan in Sberbank, a refund of interest more precisely, is carried out when drawing up an application for a fixed form in the organization. In some cases, unscrupulous employees can simply refuse the client to issue the required form, and then the application can be written in free form. If the application is also denied, it is necessary to turn to the management and ask for a copy of the statement they accepted, with a note of its acceptance and the date.

In order to effect a refund of interest on early repayment of a loan, the application must contain:

• Passport data of the applicant;
• All data on the concluded loan agreement;
• The account number to which the overpayment will be transferred.

A copy of the loan agreement must also be attached to the application. The application is usually reviewed for at least three days.

Refund of additional payments

In addition to overpaid interest, borrowers often find in the number of paid services those that they absolutely do not use and do not subscribe at all to their accrual.

These include:

• Mobile bank;
• Insurance premiums and so on.

Bank-imposed services can be canceled at any time, at the request of the borrower, and if their payment was included in monthly installments, the bank is obliged to recalculate and, if necessary, return the customer's funds.

It is important to know that even with unconscious use of services, some time will have to be paid. Also, certain types of commissions are not subject to cancellation - the fee for issuing a loan and servicing the account, since the conditions are standard for all types of contracts.

Conclusion

Be sure to check with the bank for financial assistance before contacting the bank. Early repayment of the loan, return of interest, annuity payments, return of additional payments - all these are quite complex concepts, in which you should carefully understand. Of course, taking into account the probable size of the sums received, the process fully justifies itself.