Here is all you need to know about the early extinction of the assignment of the fifth.
The early termination of the assignment of the fifth is the possibility offered to those who take out a loan of this type to close the loan agreement in advance of its natural expiration.
We mentioned the topic in our article dedicated to the legislation on the transfer of the fifth. Moreover, if the extinction option is usable by the beneficiaries of a loan, it is always because a precise rule allows it.
How early termination assignment of the fifth works
Early termination assignment of the fifth works in a rather simple way. At any stage of its financing, the user can exit the assignment contract. How? Paying the entire residual capital , including interest and charges that have accrued up to that moment.
But watch out for another aspect too. In fact, in order to protect themselves from the non-receipt of interest on the residual installments of the loan, credit institutions could apply a penalty. Obviously, the conditions of applicability of the penalty must be clearly included in the contract of transfer of the fifth.
How to calculate the early extinction of the assignment of the fifth
Many users will wonder how the residual amount to be paid to the banking institution is calculated for the early repayment of the transfer of the fifth. As mentioned above, there is the criminal discourse to be taken into consideration.
In 2011, however, the consumer credit reform established that the penalty is valid only for transfers of one fifth of an amount exceeding ten thousand dollars. Other limits have also been set on the percentage applicable as a penalty.
The maximum compensation that banks can request is equal to 1% of the residual capital if the natural expiration of the contract is more than twelve months away. If, on the contrary, early repayment is required against a deadline of less than one year, the maximum penalty is 0.5% of the residual capital.
How to request early termination of the assignment of the fifth
To request the early repayment of the loan with assignment, the procedure to follow is quite simple. You need to get in touch with your bank, by registered mail or certified e-mail (PEC). The identification data of the beneficiary of the loan must be indicated in the email to that of the contract. Within ten days, the bank is required to deliver the extinguishing statement to the customer.
It does not end here. The credit institution, once received by the customer the remaining amount for the purposes of extinction, must issue a release. It is a document with which the closure of the loan agreement is officially certified.
What is the extinct count
The extinguishing statement is a document through which the bank makes known the items of expenditure that the customer must incur in order to pay off the loan. Therefore, regardless of the type of financing you wish to extinguish, the extinctive count can never be missing.
Thanks to this document, the customer knows with certainty the residual amount to be paid to the credit institution, as well as the number of the Iban Code on which to make the payment.
Insurance on the transfer of the fifth: how does it work in case of extinction?
When signing a contract for the transfer of the fifth, it is also mandatory to take out a life insurance policy. The only insurance on the transfer of the fifth for retirees is the life insurance policy. Employees also need to take out insurance that protects against layoff risk.
The amount of this policy is paid in the initial phase of the financing, moreover in a single solution. The user has the right to request a refund for the unused prize. The calculation is based on the difference between the overall duration of the loan and the date on which the loan is signed.
An example will better clarify what has been said. If the loan has a natural expiry date set on 30-06-2018 and the customer decides to pay it off on 02-06-2018, the customer will not be able to enjoy the 28 days of insurance premium already paid and for which he is entitled to request the refund.