In this case, however, there is no entry at the credit bureau and the loan can be transferred to another credit institution. She files for bankruptcy and forwards the current loans to another financial institution. To How can I cancel my contract? If the bank has terminated, the date stated in the notice applies in principle. If the Borrower terminates the loan, the termination will be effective as soon as the Bank has confirmed receipt of the notice in writing.
If the lender can terminate your loan
If you are in arrears with the credit installments, the bank can terminate the loan agreement – but only after prior warning and reasonable grace period. For the bank to cancel a loan, it must first send at least one payment reminder. The bank must draw the attention of the bank client in the document to the consequences of a continued non-payment and order the dissolution of the contract.
As a rule, the bank does not act until two installment payments fail to follow one another properly. Sometimes the arrears are also calculated as a percentage of the loan amount. In real estate financing, the termination of 2.5 percentage points, with ordinary installment loans of five to ten percentage points is imminent. The bank must give the buyer two months to reminder their payment.
Bank Credits: When can a bank terminate a loan and what rights do bank customers have if their loan is terminated?
In this way, the bank can prepare itself as a lender and the customer as a borrower at the time the loan is granted and until the time of repayment, ie repayment. However, a fixed term does not mean that under no circumstances can the lending business expire without notice. Under what conditions can the lender or borrower terminate the loan early?
The reason for the extraordinary termination is set out in the 490 and 498 Civil Laws and additionally in the 313 and 314 Civil Laws. Instead, they grant loans in the hope that the loan amount plus the contractually agreed interest will be repaid in installments. For the lending bank, therefore, the basis of the transaction is always the confidence that the financial position of the borrower is as healthy as the borrower has shown when signing the contract.
In the event of a deterioration of the borrower’s assets under the corporate loan agreement, the bank may liquidate the loan according to 490 BGB. In addition to the deterioration of the assets, the bank can also terminate the credit relationship pursuant to 314 HGB if the borrower gives up his payment obligations. “In this case, however, the bank must remind the bank client to settle the outstanding installments before the contract is terminated.
Lawmakers (usually a bank or savings bank) make termination by the lender much more stringent than the borrower’s. This is because a loan termination, unlike the bank, can pose a direct threat to the existence of the borrower. In the case of justified termination, the borrower must repay immediately the outstanding loan amount, which leads to his insolvency.
In the case of a legitimate termination – in addition to the already economically stable situation – the bank is not directly threatened in its existence, as it then has to accept the early termination of the contract, but on the one hand compensation for the early repayment and on the other side will also be refunded the loan amount granted.
In the case of bank customers, therefore, questions arise as to the conditions under which they can terminate a loan and how they hedge against the termination of the loan agreement. The first distinction is between corporate loans (ie loans lent by the bank to a company) and consumer loans (where the bank lends the loan to a consumer).
Consumer credit agreements can only be terminated by the lending bank under the strict conditions of the 498 Civil Code. 498 BGB grants the bank a special right of termination in case of payment arrears of the customer. Ordinary termination (timely termination without special reasons) is not possible. For consumer credit agreements of indefinite duration, a period of at least two months may be set.
But back to the consumer loan agreements (including real estate loan agreements) with fixed maturities: These can be terminated by the lending bank in case of arrears of the borrower according to 498 HGB under the following three cumulated conditions: 1. “2” 2. the lender gives the borrower a futile payment period of two weeks by declaring that he / she will claim the full balance of the claim in the event of non-payment within the payment period.
If one of these three legal requirements is not met, the credit relationship can not be terminated without cause for good cause. In the case of late payment according to 498 Civil Code, the lending bank has to grant the borrower first a term of payment with the threat of completely settling the remaining claim. The deadline is only sufficient if the letter indicates to the borrower how much he is in arrears so that he clearly knows how much to pay to avert the termination within the set time.
The credit institution can only pronounce an extraordinary termination pursuant to 498 BGB after setting a reasonable period of grace. A timely termination is not required if the borrower refuses to fulfill the contract seriously and finally. If the borrower repays the repayment amount within the specified deadlines, the bank can not terminate the loan business as before.
Otherwise the termination is not valid. An example of a customer’s debt-free arrears is a transfer error of the transferring bank. Withdrawal will be explained by an express declaration of the bank. Expiration clauses in the General Terms and Conditions under which the loan is due for non-payment immediately are invalid. In the case of loan agreements with a company, it is somewhat easier for credit institutions to terminate the loan exceptionally.
Relevant are the 490 and the §§ 313, 314 and the general conditions of the lending bank or the savings bank. The credit institution may terminate the credit institution pursuant to Section 490 (1) of the German Civil Code in the event of a significant deterioration in the assets or the collectability of a security provided by the borrower for the credit institution.
Termination is only possible if repayment of the loan is in danger. It is also entitled to terminate the credit agreement without notice if the borrower is in default. In this case, he also has a right to compensation for the damage caused to him by default against the customer of the bank. Another important cause that can entitle the lender to extraordinary liquidation is misstatement of the lender’s financial position.
How can bank customers cancel their loan? Bank customers whose loans are terminated early should check very carefully (if possible through a specialist lawyer) whether the termination is legally valid. If it turns out that the loan termination by the bank is legally ineffective, the credit relationship will not be changed. In this case, the customer can refuse the bank the refund.
In the event of an unsuccessful termination of the loan, the orderer shall also be entitled to compensation for the damage caused to him by the termination (additional expenses for a new loan, loss of assets, reduction in earnings, insolvency etc.). The lending institution is obliged to prove the termination reasons it has claimed. For the consumer loan agreement, this means that it proves a payment arrears in accordance with the requirements of 498 BGB, and that it gives the borrower a reasonable payment period for the outstanding amount.