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Old 31.01.2017, 18:17
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Paying a personal loan off early

I have a personal loan with Cembra bank which has just under 3 years to run, in the the next few months I will be hoping to pay off the remainder of the loan in full.

I am just a little confused as to the costs involved when paying a loan off earlier than maturity date.

Am I right in thinking that according to swiss law, they cannot charge the remaining interest which would be due or any penalty fees
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Old 31.01.2017, 18:27
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Re: Paying a personal loan off early

What does the contract say?

I would not be at all surprised to find you are liable for the interest over the full period...
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Old 31.01.2017, 18:29
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Re: Paying a personal loan off early

It should be stated in the contract and as AbFab said, you will often be asked to pay the interest part. In the past they used to claim that your loan was secured oppositely from their side and they had their obligations/interest to pay......
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Old 31.01.2017, 18:34
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Re: Paying a personal loan off early

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Am I right in thinking that according to swiss law, they cannot charge the remaining interest which would be due or any penalty fees
No such law exists AFAIK. Follow the contract.
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Old 31.01.2017, 18:49
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Re: Paying a personal loan off early

If it is a consumer loan Art. 17 of the KKG (Konsumkreditgesetz) applies:
https://www.admin.ch/opc/de/classifi...index.html#a17

I.e. no further interest is due and a commensurate reduction of the costs (whatever that means...) relating to the unused loan period.

Last edited by Mica; 31.01.2017 at 18:55. Reason: word order
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Old 31.01.2017, 19:01
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Re: Paying a personal loan off early

there's no cost for personal loans, all new principal and interests will be calculated based on the day of your early repayment.
It's a legal incentive for borrowers to repay when they can.
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Old 31.01.2017, 19:02
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Re: Paying a personal loan off early

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If it is a consumer loan Art. 17 of the KKG (Konsumkreditgesetz) applies:
https://www.admin.ch/opc/de/classifi...index.html#a17

I.e. no further interest is due and a commensurate reduction of the costs (whatever that means...) relating to the unused loan period.
That means that some part of the "missed" interest will/can be reclaimed in some way. How much? Only the bank can tell you but it definitely will cost you more than just repaying the outstanding capital
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Old 01.02.2017, 10:15
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Re: Paying a personal loan off early

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Am I right in thinking that according to swiss law, they cannot charge the remaining interest which would be due or any penalty fees
According to this article by the Beobachter you are right, you don't owe anything additional, like foregone profit. You pay the outstanding balance plus interest accrued by the cancel date and are done. The balance need not be what the bank says it is.

So cancel your credit, simultaneously requesting a written confirmation within, say, seven business days (leave enough room to send another one if something goes wrong). I'd phone first and ask what forms they accept and what they require. Also request a Kontoauszug and their Kreditfähigkeitsprüfung that you may want to check most thoroughly. Given that it's February your earliest cancel date is May 31, next date is June 30.

Something like "Hiermit kündige ich meinen Kreditvertrag mit Nummer xyz auf den nächsten gesetzlich zulässigen Termin, was meines Wissens der 31. Mai ist. Gerne erwarte ich Ihre schriftliche Bestätigung innerhalb der nächsten sieben Arbeitstage, zusammen mit dem vollständigen Kontoauszug und der Kreditfähigkeitsprüfung." should do just fine.

It is strongly recommended to check both the balance and whether the creditworthiness check was done correctly. Often there are errors in your creditworthiness check, in which case you only owe the capital without any interest and other costs(!); also check if there's missing anything. The most common errors are child care costs missing, improper lump sum deduction for your travel costs to work and eating there, improper deductions for health care costs.
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