Hi folks,

Back in '08 I was in a bit of a cash crunch and borrowed some dinero from GE Money Bank. I asked for a 3 year repayment schedule, they sent me papers for 5. Thinking the loan could just be repaid early I signed the papers, got the loan, and have paid the loan off early according to my nifty spreadsheet.

Paid the loan off early, in my opinion, that is.

I just got off the phone with the folks at GE Money Bank (to determine my last payment to the exact rappen) and they seem to be taking the line that I must pay off all the interest as calculated for the original full five year term! They say I still owe several thousand francs. I am flabbergasted.

Is this legitimate in Switzerland? I'd always had idea that Swiss law protected the consumer regarding this kind of stuff. Or is GE Money Bank trying to screw me for fun and profit?

I can't tell if I'm being naive or if GE Money Bank is being evil. Please advise.

Thanks in advance to the collective wisdom of EF!

Stu



Edit:

After browsing around EF a bit I found www.konsum.admin.ch, which has the Federal Laws on Consumer Credit (Bundesgesetz über den Konsumkredit (KKG)). Artical 17 of SR221.214.1, early redemption (Vorzeitige Rückzahlung) seems to say that I'm right. But that's a lot of Google Translating of German language legalisms.

Can someone help me work through this?

sorry to hear that, sorry I can't help, I wish you good luck with your nasty problem..

Hello

I found this in german:

Vertragsauflösung, vorzeitige Rückzahlung Kapitalrückzahlung jederzeit möglich. Der Kreditgeber gewährt den vollen Erlass von Zinsen auf die nicht beanspruchte Kreditdauer. Gebühr: CHF 25

So - you have to pay the full interest + 25 chf

http://www.checkcheck.ch/Kredite/Ver...12&Payback=All

Recent history shows banks are the biggest thieves of all.

Thanks for that! Google Translate translates this as...

The way I interpret that is "pay off the capital + a 25 franc fee". But you say "pay the full interest". Confused.

Lets say that you borrow 10000 chf for 60 month at 9,95% p.a.

Total cost = 2607,90 + 10.000

So they will be happy once you pay them 12.607,90 + 25 fee.

That is how i understand it.

Does not sound right.


translates to

"The lender shall grant full remission of interest on the unused credit period."

So if he paid early, the unused period should not incur interest.
Unless the contract stated that the interest WILL be incurred on the agreed duration of the contract irrespective of whether it is paid off earlier, which would basically make paying it off earlier a moot point.

That just doesn't make any sense to me. What is the point of paying off early then? I'm reading it as "pay of the capital and relevant interest." As interested is compounded periodically, it payoff amount should not include the full 2.6k in your example.

Anyway, thanks again. I'm gonna go read the original contract with a refreshed eye. (It's been 3 years!) More later

stu

I'm not an expert on this nor a lawyer, therefore this is not legal advice, but Article 17 you quoted sounds crystal clear to me. Even if your contract says something different, I'm pretty sure that article 17 would take precedence because that law was designed to prevent consumers from getting shafted by the banks. The link posted by golfer seems to confirm this as well.

I think that you either ended up with someone on the phone who doesn't know what (s)he's talking about or that GE Bank is just trying to make you pay.

2 years ago I paid off early payments on a car. I called and asked them if I just pay all the remaining pink slips in one shot, and they said no, I'd get a new final bill, deducting the interest of the remaining months... but that was with Revi-leasing.

You need to ask for a Final Settlement Figure (equivalent in German of course), this will then take into account all the payments made and remaining interest, you shouldn't have to pay the interest for the whole period, but they might charge you one or two months worth of interest or an early settlement fee.

Just speak to them and if they can't solve it there and then ask to speak to a manager.

The key word here is Term.

If you borrow 10,000 chf with a 3 years repayment term. You will always end up paying them back the 10,000 chf you borrow plus the interest calculated for 3 years. It doesn't matter whether you pay it early or stick till the end of your repayment terms.

The only consolation you get by paying it off early, is when they give you a little bit of discount from the interest they charged you, in a form of Settlement Figure - mentioned above. But you have to ask for it as they don't normally offer it by default.

On a side note. If banks offer you a settlement figure, make sure you ask them for a Letter stating by paying the agreed settlement amount, the debt will be classified as Settled before making the payment. And you should always keep this letter as evidence, in case months later they ask you to repay the rest