Calculation of the residual debt of a loan
The calculation of the residual debt of a loan takes place within the extinction count if it is decided to resort to early repayment. This option has become more convenient in the last few years for some categories of financing, such as mortgages, but it is still an opportunity valid also for loans in general. In fact, by calculating the early repayment of a loan, you could save on interest expense by repaying all installments still to be paid in a single installment: no interest rate would be applied to these installments.
The calculation of the residual debt of a loan must take into account some factors, starting from the amortization calculation methods. If in fact, as usually happens in Italy, the bank chooses the French calculation mechanism, the interest expense will be concentrated in the first installments to be paid. What does this mean? When you carry out early redemption, you will have to assess at what stage of the repayment you have reached: if you are at the beginning, the savings in interest could be significant. If, on the other hand, you have already paid many installments, you have already paid most of the interest and therefore the economic benefits will be reduced.
This reduction will be considered of the extinction count . The first part of this document will in fact present the residual capital to be liquidated, having subtracted the interest still to be paid. To this result, any penalty to be paid to the bank must be added. But it is not certain that this is mandatory: if the penalty for a loan normally cannot exceed 1% of the capital still to be repaid, in calculating the residual debt of a mortgage it must be considered that the Bersani decree has forbidden the banks to impose a penalty on mortgages signed after 2007.
Once the amount of the residual debt has been established, the extinction count then proposes all the indications to carry out the early repayment: the IBAN must be communicated to carry out the payment, the reason and the last date after which the count is no longer valid. In this way you will have completed the calculation of the residual debt and will be able to proceed to the early repayment of your loan.