Various unforeseen situations such as a broken car or a sudden damage to the house, but also a short-term financial bottleneck, as the employer is deficient in the payment, can lead to the sudden need for a loan. The banks, especially the direct banks, are attracting fabulously low interest rates, especially now that the European Central Bank’s benchmark interest rate has reached its historic record low. A loan application is made quickly; Various documents to verify your creditworthiness must be submitted. The application and the documents will be examined, a bank statement will be obtained and the loan will be paid out if all the conditions are met. Now it can happen that your bank terminates your loan agreement – the bank has several reasons. In various cases, the bank is entitled to terminate the loan agreement, but termination is not always lawful. Therefore, if you have received a notice from your bank, you should carefully examine the process and seek the advice of an expert.
What you should know about the termination of the loan agreement by the bank
Often, the loan termination is not legal
If you are in arrears with two installment payments for your loan, the bank is entitled to terminate your loan agreement. However, this is only legal if the bank has sent you a written warning before. But it does not have to come to a termination. If you can not pay the installments, you should inform the bank in good time, the installments can then be deferred. A termination of your credit agreement by the bank is also possible if the bank determines that you have made in your loan agreement false information about your financial circumstances. In the worst case, the bank can even terminate without notice, even without an explanation. The reason for the termination of the loan agreement by the bank is in most cases gross misconduct of the customer. The Civil Code, § 498, sets the termination rights of the banks. The bank is entitled to terminate the loan agreement if the borrower has not paid two installments and ten percent of the loan amount. For loans with a maturity of more than three months, the bank can terminate the loan even if it is less than five percent. In order for the termination to be legally effective, the termination must be preceded by a final reminder in which the customer is given a period of 14 days to pay the outstanding installments. In the reminder, the bank must offer the customer a conversation in order to find a solution together. With this conversation, it is often possible to avoid dismissal.
Not always is the bank really right
The bank is not always right to terminate the loan agreement. If the bank has sent a reminder, but the claim is too high and can not be settled within the set period, you as a customer must not simply accept the notice. In the case of an open-end loan, the situation is different; it can be terminated by the bank within 30 days without prior warning. The Bank is entitled to do so if it believes that your monthly income is too low to settle the credit line. The credit line can even be terminated without notice!
A termination of the loan agreement can prevent you
If you realize that you can not settle the installments on time, you should inform your bank. If you have not done so yet, and the bank has sent you a friendly request to settle the installments, it’s time for you to respond and talk to your adviser – the bank can work with you to find a solution. You should seek the conversation as early as possible if you are in financial difficulties due to an unforeseen situation such as unemployment, illness or divorce. The loan rates can be adapted to your situation, this is temporary, but also permanently possible.
If you talk to your bank adviser and subsequently adjust the terms of your loan, you can prevent a negative entry in the bank, which continues to worsen your credit. If an agreement with the bank is not possible, you should seek advice from an expert. If the termination is still unavoidable, a recognized debt and consumer bankruptcy counseling can help you, it is free. It can be particularly complicated with a real estate loan, since the foreclosure auction threatens if you can no longer pay the installments. You should seek timely advice from a lawyer. To be able to keep your property, you should try a loan application with another bank.