A consumer who has taken out a loan is free to repay it ahead of the deadline stipulated in the loan agreement. As much is common ground by now. Yet doubts persist as to whether or not such a consumer should be entitled to reduction of the aggregate lending cost and to a corresponding refund, Bernadeta Kasztelan-Świetlik of GESSEL explains.
According to “What fees should you look out for when borrowing from a non-bank lender ? Advice for consumers”, a manual posted on the website of the Polish Office of Competition and Consumer Protection in 2013:
“In the event of early repayment of a loan, a consumer is entitled to refund of some of the costs incurred. The aggregate lending cost should be reduced by the costs appertaining to the period by which the term of the loan agreement has been reduced, even if the consumer has actually incurred them before such repayment. In other words, a consumer does not have to pay interest for the period subsequent to complete repayment of the loan. Other fees should likewise not be charged, such as fees for home service, in that once the lending period has been shortened, the number of home visits for collection also drops”.
This wording suggests that the refund ought to cover not all the lending costs, only some of them – the ones which are associated with the period of the loan. Reasoning a contrario, the reimbursement should not extend to costs borne by the consumer independently of the agreement term / duration of the loan, such as costs charged by the lender in connection with scoring, marketing, or legal and administrative expenses.
Yet the joint position of the Financial Ombudsman and the Office of Competition and Consumer Protection published on 16 May 2016 states that, in the event of early repayment, the reduction should extend to any and all lending costs, their exact character notwithstanding, the sole caveat being that this reduction should be proportional in character, i.e. that the consumer’s right to reimbursement refers to the period spanning the date of actual repayment and the final repayment deadline originally stipulated in the loan agreement (…)
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