The personal payday loan is in principle used to spread funding over several monthly payments. However, if a cash inflow occurs, it is possible to repay his personal credit in advance.
The principle: a repayment of the personal payday loan spread over several monthly payments
In principle, the repayment of a personal payday loan is made by paying monthly payments, the number and amount of which depend on the amount borrowed, the possibilities and the will of the borrower. Generally at a fixed rate, the monthly repayment of a personal payday loan remains the same throughout the loan. They are usually not intended to evolve. However, the borrower can decide to prepay the amount he owes to the lender.
Prepayment of the personal payday loan
A cash inflow can decide the borrower to repay his personal payday loan sooner than expected. This is called early repayment of the personal payday loan. This modality is a right for the individual which is provided for by article L312-34 of the Consumer Code: “The borrower can always, on his initiative, prepay, in part or in full, the credit which has been agreed. “
The early repayment can therefore relate to the entire amount remaining due, or only a part, in order to reduce the number and / or amount of monthly payments.
The penalties due to the early repayment of the personal payday loan
The credit institution is entitled to request penalties for early repayment of the personal payday loan by the borrower. It should be noted that this possibility has only been offered since the Congilaw Company of May 1, 2011. No penalty can therefore be claimed for personal payday loan contracts prior to this date. In addition, the possibility of compensation must be stipulated in the personal payday loan contract.
The amount of prepayment penalties
The amount of penalties that the lender can request from the borrower in the event of early repayment of the personal payday loan is governed by law. In fact, since the Congilaw Company of May 1, 2011, the early redemption indemnity (IRA) cannot exceed 1% of the amount of the loan. In addition, if the remaining term of the credit is less than 12 months, the penalty must be less than 0.5% of the amount. In all cases, the amount of penalties cannot exceed that of the interest that the borrower would have had to pay if he had continued to pay his monthly payments according to the initial repayment plan.