When can a loan be canceled? What are the rights of the borrower and which of the lenders? If a loan is canceled, this means in technical jargon that there is an ordinary or extraordinary right to cancel. Both the borrower and the lender can exercise this right to terminate the loan. The borrower has an ordinary right of termination in the following cases.

1. If the borrower receives a notice period after the term of the fixed interest period, he can apply for the loan to be canceled. But only if the fixed interest period is shorter than the time that was agreed for the repayment and no other interest agreements can be made otherwise

2. If the loan taken out was not secured by so-called mortgages, the borrower can terminate the loan six months after having received the complete loan. Of course, the notice period must be observed – this is usually three months.

3. Each borrower is entitled to terminate the loan after 10 years have passed that the loan amount has been paid out. Again, the notice period, which is half a year, must be observed.

If you have concluded a loan contract that comes with a variable interest agreement, you can also simply cancel the loan by observing the notice period and redeem the outstanding amount. A floating rate means that the interest on your loan is adjusted by the bank. Since the variable interest rate is based on the market, fluctuations can occur in this regard, which the bank adjusts every few months.


What is ordinary termination?

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Ordinary termination means that the borrower must pay the loan within 14 days. Ordinary termination is often also called timely termination. If the borrower has no interest payable to the lender, only the outstanding debt is to be paid in order to terminate the credit relationship. If the loan is interest-bearing, a three-month notice period must be observed before the loan can be canceled. The lender is then still entitled to the interest due in this period of notice.


Right of termination by the lender

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But not only the borrower has the right to an ordinary or extraordinary right of termination, the lender can also exercise these rights. The lender has the right to terminate a loan for loan agreements with an indefinite term – here too, the three-month notice period must be added.

The lender has an extraordinary right of termination if the financial situation of the borrower changes negatively after the contract is concluded, or if the collateral that the borrower has deposited deteriorates and he cannot provide new collateral.