CHAPTER IV

INFORMATION AND RIGHTS CONCERNING CREDIT AGREEMENTS

Early repayment
Article 16
1
The consumer shall be entitled at any time to discharge fully or partially his obligations under a credit agreement. In such cases, he shall be entitled to a reduction in the total cost of the credit, such reduction consisting of the interest and the costs for the remaining duration of the contract.
2
In the event of early repayment of credit the creditor shall be entitled to fair and objectively justified compensation for possible costs directly linked to early repayment of credit provided that the early repayment falls within a period for which the borrowing rate is fixed.
Such compensation may not exceed 1 % of the amount of credit repaid early, if the period of time between the early repayment and the agreed termination of the credit agreement exceeds one year. If the period does not exceed one year, the compensation may not exceed 0,5 % of the amount of credit repaid early.
3
Compensation for early repayment shall not be claimed:
a
if the repayment has been made under an insurance contract intended to provide a credit repayment guarantee;
b
in the case of overdraft facilities; or
c
if the repayment falls within a period for which the borrowing rate is not fixed.
4
Member States may provide that:
a
such compensation may be claimed by the creditor only on condition that the amount of the early repayment exceeds the threshold defined by national law. That threshold shall not exceed EUR 10 000 within any period of 12 months;
b
the creditor may exceptionally claim higher compensation if he can prove that the loss he suffered from early repayment exceeds the amount determined under paragraph 2.
If the compensation claimed by the creditor exceeds the loss actually suffered, the consumer may claim a corresponding reduction.
In this case, the loss shall consist of the difference between the initially agreed interest rate and the interest rate at which the creditor can lend out the amount repaid early on the market at the time of early repayment, and shall take into account the impact of early repayment on administrative costs.
5
Any compensation shall not exceed the amount of interest the consumer would have paid during the period between the early repayment and the agreed date of termination of the credit agreement.