Paying off a loan early: how high may the 'penalty' be?
You want to repay your loan early, and the bank demands a 'prepayment penalty'? This is not unlimited and even disappears entirely in certain cases. It is worth taking a close look.
Reach your next steps and the matching ready-made texts in just a few minutes, free of charge:
Check the claim →Your chances of getting your money back
What you should do now
- 1
1. Request the calculation
Have the amount of the prepayment penalty and its calculation explained to you in writing.
- 2
2. Check the mandatory information
Is the statutory mandatory information in the contract correct and complete? Errors can make the penalty disappear.
- 3
3. Check the 10-year cancellation
If your mortgage loan has been running more than 10 years, you can cancel with 6 months' notice without a penalty (§ 489 BGB).
- 4
4. Dispute an excessive amount
If the claim seems too high, dispute it. Consumer advice centers sometimes offer calculation checks.
Frequently asked questions
Do I have to pay a prepayment penalty?
On early repayment, the bank may generally demand a reasonable prepayment penalty (§ 502 BGB). But it is capped in amount. In certain cases it disappears entirely, for example if the mandatory information in the contract is faulty.
When can I get out of the loan free of charge?
For mortgage loans, after 10 years have passed (from full disbursement) you can cancel with six months' notice without a prepayment penalty (§ 489 BGB). The penalty can also disappear if the mandatory information is faulty or a valid withdrawal applies.
Take action now
We put together the ready-made texts and the right places to contact for you.
General information for self-help, not legal advice (RDG). In case of a high loss or uncertainty: contact a consumer advice center or a lawyer.