Repaying a loan early: rights and practical steps

What does the Consumer Credit Act (KKG) provide?

You have unexpectedly received money or built up a reserve over time and want to repay your loan sooner. For loans within the Consumer Credit Act’s scope, Art. 17 provides a clear basis: obligations under the loan agreement may be fulfilled early. You are entitled to a waiver of interest and an appropriate reduction in costs for the unused loan period.

This does not mean all interest previously paid is refunded. You used the loan during the preceding months. What matters is interest and term-dependent costs for the future period that will no longer be used. The actual statement must show this distinction clearly.

First check whether your agreement is actually subject to the KKG. The law has exceptions. For financing outside its scope, contractual repayment conditions and the legal basis should be clarified separately. Do not rely solely on the general label “personal loan”.

Why you need an up-to-date final statement

The last displayed account balance and the sum of remaining instalments may differ. The latter may include interest for months during which the loan will no longer be used after early repayment. Request a statement for a specific repayment date.

A purely mathematical example: remaining instalments total 10'800 francs. The confirmed settlement amount on the agreed date is 10'000 francs. Assuming no further items apply, future payments are 800 francs lower with immediate settlement. The difference is illustrative, not a general savings rate.

Ask which ongoing payments are already included in the statement. If another monthly instalment is collected between preparation and settlement, an adjustment may be needed. Do not rush to transfer your own estimated amount and then assume the contract is closed.

Do not use up your entire reserve

Earlier repayment saves future borrowing costs. At the same time, you lose immediately available cash. Check whether enough will remain for foreseeable bills and unexpected expenses. A large repayment is of little help if a tax bill or necessary repair shortly afterwards can only be paid by taking on new debt.

The right reserve depends on your household. Fluctuating income, children or high deductibles may require more room than a very stable budget. There is no blanket reserve that suits everyone. Record actual expenses and risks rather than relying on a supposedly universal minimum figure.

Also compare timing: if predictable major expenses are due in a few weeks, it may make sense to account for them properly first. A complete budget overview helps you decide what amount you can genuinely do without permanently.

What to clarify about an additional partial repayment

If you only want to repay an additional part, ask the lender how this is handled. Clarify whether and how an extra payment changes the schedule: does the instalment stay the same and repayment end sooner, or is another plan agreed? Do not assume an arbitrary transfer automatically has the effect you prefer.

Have the updated balance and future payment schedule confirmed. This shows which interest will be charged and which dates remain. This practical coordination is especially important if direct debits are running or there are several contract accounts.

Separately arranged insurance must also be checked. Ending a loan and ending an insurance agreement may be different processes. Read the terms and clarify cancellation, the end of cover and any premium settlement directly with the responsible organisation.

How to close the loan properly

1. Check the contract and whether the KKG applies.
2. Establish the available amount after deducting necessary reserves.
3. Request a written statement with a settlement date.
4. Clarify the payment reference and treatment of instalments already in progress.
5. After payment, keep confirmation that the agreement is fully settled.

Then check whether automatic payments are still being triggered. Adjust a standing order only once correct termination is established. Keep the statement and proof of payment so that later questions can be answered clearly.

If a new loan finances the early repayment, this is financially a case of refinancing through another loan. You must then also check whether its interest and costs cancel out the saving. Repayment from your own money and switching banks are two different decisions.

Frequently asked questions

Will I get back all the interest I paid previously?

No. Art. 17 KKG concerns the unused loan period. Interest already incurred for actual use is not refunded across the board.

Is adding up all remaining monthly instalments enough?

No. Request an up-to-date statement for the planned repayment date. The instalment total may include future interest.

Should I use all my savings?

Check your necessary reserves first. Repayment should not mean that foreseeable expenses afterwards can only be paid with a new loan.

Sources and information date

Information as of 13 October 2026. Provider conditions may change. The individual assessment and contract documents are decisive.

• Consumer Credit Act, particularly Art. 7 and 17

Credit must not be granted if it would lead to over-indebtedness. A budget calculation provides a non-binding indication, not a loan offer.