AZE.US
Some borrowers in Azerbaijan say they face difficulties when trying to repay bank loans ahead of schedule.
According to citizens, in some cases banks demand additional compensation for early repayment. Others say they cannot pay more than the scheduled monthly amount through a bank’s mobile application or website.
The issue has raised questions about borrowers’ rights, the way loan payments are calculated and whether banks can demand interest for the full loan term if the debt is closed earlier.
Lawyer Samir Gasimov says a borrower has the right to repay a loan ahead of schedule. This right is guaranteed by Azerbaijan’s Civil Code and cannot be restricted by a loan agreement.
According to him, if a bank’s mobile application does not allow an additional payment above the schedule, the borrower can apply directly to the bank. In any case, the bank must ensure the customer’s right to early repayment.
Under the law, a borrower must pay interest only for the period during which the loan was actually used. This means interest is calculated up to the day the debt is repaid. Banks do not have the authority to demand future interest for the remaining period of the loan.
However, in some cases a bank may request compensation for early repayment. Experts say this is possible only if such a condition is included in the loan agreement. Even then, the amount is limited by law.
If more than one year remains until the end of the loan agreement, compensation cannot exceed 1% of the amount repaid early. If one year or less remains, the maximum compensation is 0.5%.
Gasimov noted that when a loan is repaid early, the payment should be directed toward reducing the principal debt, not covering future interest.
If a bank refuses early repayment or makes an unlawful demand, borrowers may file a complaint with the Central Bank of Azerbaijan. If they disagree with the regulator’s decision, they may also take the matter to court.
AZE.US