A special repayment right is an agreement between the borrower and the lender that can be set out in the loan agreement. This right gives the borrower the opportunity to make special repayments on a loan. However, it is important that the use of the special right of repayment be exempted from the borrower. Thus, he is not forced to a special repayment, but can make it, if he could, for example, a higher cash receipt post. It may be agreed with the special right of repayment that the special repayment may take place either at certain times or at fixed amounts. The special repayment right is to be agreed as an option in the loan agreement.
For the borrower, a special repayment can always be worthwhile, because on the one hand, the interest on the loan is lower and the term can also shorten accordingly. However, the special repayment right can often only be claimed if no fixed interest period has been agreed. In such cases, special repayment is worthwhile, especially in the case of fluctuating market interest rates. The special repayment right can also be linked to debt rescheduling. Thus, for example, at a favorable interest rate, a new loan can be taken, with which the special repayment is made. A prerequisite here, however, is that no limit has been agreed for the amount of the special repayment.
For the lender, the special repayment right is a heightened risk, which, through the provision of a special repayment by the borrower, may be the case in the case of refinancing, which must take place on less favorable terms . For this reason, many credit institutions for the special right of repayment charge a surcharge. This is not associated with the option to redeem , but calculated by a slightly higher interest rate. A credit institution is not required to give a borrower the special repayment right as an option. In order to obtain benefits, it may therefore be the case that a special repayment obligation is offered. However, this should not be used unless a higher level of cash receipts is actually expected, as failing to meet the obligation to remit in part may result in significant disadvantages for the borrower, for example, a high interest rate on the loan. Should the special repayment right not be granted, one should renounce the special payments entirely and pay only his monthly installments.