In Azerbaijan, citizens sometimes take out new loans from another bank to close their existing loan debts. In the financial sector, this process is called refinancing.
In some cases, the previous bank may charge the customer a commission for early closure of the loan. The reason for this is that the bank loses a portion of the interest income stipulated in the loan agreement.
It is noted that such commissions are usually specified in advance in the loan agreement. According to the agreement, when a loan is closed early, the bank may apply a certain percentage – for example, an early closure fee of 1–3 percent.
Financial experts state that individuals wishing to close their loan with a loan from another bank should first carefully review the terms of their existing loan agreement. This is because, in some cases, early closure commissions and other service fees may diminish the advantages of a new loan.
According to financial experts, this is regulated by the bank's internal policy. A customer who closes their loan debt quickly may be charged 1-2 months' interest.
Lawyer Əkrəm Həsənov stated in his comments to Modern.az- that money charged in the form of interest should be accrued after the period has passed. If paid monthly in advance, no interest should be charged for that month, or generally speaking, for that period, under any circumstances.
It should be noted that refinancing is considered financially advantageous for citizens in terms of obtaining a lower interest rate, reducing monthly payments, and consolidating several loans into one.
