What is a fine?

The penalty penalty is a cash fee that is assessed on the debtor when lending a loan before originally agreed. Credit institutions promote this to ensure that they earn a certain amount of money from lending money to the debtor. Over the years, this type of fine was the subject of a big debate, and as a result, not all loans have it as a request. If the client pays the loan before originally agreed, there is less interest. In this case, the rental institution is to lose money on the original.

Many credit institutions connect this fine to the loan because loan refinancing has become relatively common. If the consumer takes the loan, it pays for a certain period of time and then refinancing with a lower interest rate, he or she Saves money. However, the credit institution that provided the original loan loses money that would be obtained from interest payments.

Specifics of a fine about the preparation withE differs from one creditor to another. One type is referred to as Soft REPPAY and is dropped if the source of the original loan is sold, such as home. In this case, the fine is forced only if the loan is refinanted. It is considered to be an incentive for customers who do not plan refinancing while protecting the original credit institution.

According to American Finance, the most common punishment of this type uses the following formula: six months worth 80% of principal balance is owed at the time of advance. This means penally fees for a loan with an outstanding principal balance of $ 100,000 in the US (USD) and an interest rate of 8%to be approximately $ 3,200.