cancel a loan

Canceling a loan: what the law says

Many people use personal loans for various reasons. From getting out of a delicate situation, to acquiring a property or making the dream trip. Canceling a loan is a possible and highly recommended process, since it allows us to free ourselves from a burden. In this article we provide the keys so that canceling your loan is something simple and fast to do.

What is canceling a loan?

It is to return to the bank or financial institution the total capital that remains to be amortized. Carrying out this means stopping paying the rest of the outstanding bills and considering that debt as fully settled . Once done, nothing can be claimed from you and you will not have to pay any type of fee. Now, it is important that you know some important details when it comes to paying off your loan completely.

What does the law say?

In the first place, it is interesting to know which legislation is the one that protects us. In the Spanish case, it is Law 16/2011, of June 24 , which regulates consumer credit contracts. This law is the national derivation of a European regulation, specifically the   2008/48 / CE, of community application. This is to achieve a regulatory framework that protects European citizens equally.

The law is also very detailed, both in the contracting conditions and in the cancellation conditions that concern us. As a consumer, you have the full right to be informed at all times of the conditions that lead to early termination of that loan.

What it costs to pay off a loan early

The costs are clear: 1 percent if you have more than one year of loan left, or 0.5 percent if the time is less. It is as stated in article 30 of Law 16/2011 on consumer credit contracts. Apart from this, there should be no added cost for canceling a loan. Even so, there are financial entities that offer free early cancellation loans. Do you want to know which ones? The best thing is to go through our comparator and study the best options.

For the rest, it is interesting to know 3 small useful tips if we are assaulted by doubts about the cancellation of a loan:

  • It is a process that you can do yourself. It will be enough to access the personal area of ​​your online banking or your credit institution and look for the option to request cancellation. If you cannot find it, you can call by phone and find out. As a general rule, it is not a process for which you have to go to any bank branch. It is also an automatic process or that runs in a few hours.
  • Canceling a loan is always profitable. Unless the interest is 0 percent and we have a comfortable handwriting. Getting rid of a personal loan always means savings . The interests vanish at once, which allows a significant advantage.
  • You can always do it. The financial institution cannot force you to pay the entire loan in the times established at the time of signing. Canceling it by prepayment is always a possibility.

And cancel a loan before you start paying?

It is a perfectly viable circumstance. You have applied for your loan, but for some reason you want to cancel it completely before you start paying. The law protects you, in fact it is something that is included in article 28 of the Law published in the BOE on June 25, 2011 . You have 14 calendar days from the signing of the contract to exercise your right of withdrawal. To do this, contact the lender as soon as possible, you must submit your request in writing and you will not have to pay any additional expense for availing yourself of this right.

Now that you know more about how to cancel a loan, do not stop raising it as a possibility if you have managed to save some money. Saving on interest and the liberation of leaving debt behind is always the best of the rewards.

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