In addition to the loan amount, the interest rate and the installment, the fourth condition of most loans is the term of the loan. The term is also known as the repayment period, repayment period, repayment period or as the payment period. The repayment period for a loan is therefore nothing more than the pre-calculated period within which the loan is to be repaid in the form of the loan installments. This pre-calculation is usually followed, but it is also more common that the calculated and actual payment deadlines differ, even if the lender of course always finds it better in principle if the calculated and actual payment deadlines are identical. Nevertheless, in practice there are always cases in which the customer either redeems the loan prematurely or the repayment “ stops ”, so that the payment period is not kept as calculated in each case.
Credit without a time limit
While the agreement over a certain loan term is common for the largest number of all loan types, there are also a few loan types for which no payment periods are agreed. Here, above all, the overdraft facility and the on-call facility are worth mentioning. These lines of credit are normally always provided without a time limit, so there is therefore no specific term to be met. With all other standard loans, such as consumer credit (installment loan) or mortgage loan, however, a payment period is always agreed between the borrower and the lender.
With these loans, it now depends on whether the lender allows the principle that in practice there may be deviations from the previously agreed term. Falling below the term is quite common today, both in the installment loan and real estate loan lines. Because with these types of credit, the lender very often allows special repayments. In the following, these can either result in the remaining term being shortened, or the remaining rates will decrease in height.
Cannot meet the deadline – what to do
The other variant of not meeting the agreed payment deadline is that the borrower cannot meet the agreed period because he is in a financially bad situation. In principle, the bank does not of course have to accept that the borrower wants to suspend payment in installments or reduce the rate, but normally the bank will still agree to the change, otherwise there is a risk of default. In such a case, you should always talk to the bank and not just suspend payment in installments, because there is usually flexibility on the part of the lender regarding the payment period.