Bank customers can always repay a consumer loan at any time by replacing the existing loan with a new one with more favorable terms. These usually consist of a reduced APR. In some cases, rescheduling without saving money makes sense if the borrower relies on lower monthly installments and the current contracting party has rejected the request for an extension of the term.
A debt restructuring can be combined with an increase in the total loan amount. For the practical handling apply compared to the new borrowing few special features.
The practical handling of a rescheduling
Many banks require their borrowers to repatriate any existing loan. Real estate loans are generally not included in the repayment of small loans, especially since their early repayment is often not possible. In some cases, credit institutions also refrain from including other loans with a reduced interest rate, which include, in particular, vehicle financing and installment payments in the mail order and retail sectors.
Current credit lines such as the discretionary credit and the installment payment agreements on a credit card account do not have to be included in a debt restructuring at each credit bank. For the borrower, however, their inclusion in the new loan is advisable because the credit lines are subject to a variable repayment with above-average borrowing rates.
When consumers repay a loan, the new financial institution pays the money directly to the existing loan account or current loan accounts. In this way, it ensures that the applicant actually replaces an existing loan and does not use all the money to increase the volume of credit. Without this certainty, the budget bill would have to take precautionary measures with the current loan installments and the new monthly installment. A possible top-up amount naturally enters the bank account of the credit customer. This also applies to the amount that is used to clear the disposition credit.
The search for the ideal debt rescheduling loan
When bank customers rebook an existing loan, they want to save interest and compare the effective annual interest rates of different offers. Many financial institutions reschedule at a discounted rate on their non-earmarked loans. However, such an offer by no means precludes other non-interest rate financial institutions offering more favorable terms for the repayment of existing loans, so that a thorough credit comparison is essential in any case. When calculating the interest savings, bank customers consider the prepayment rates that they may have to pay to repay the current loan early. If the calculation shows that no savings are possible and the borrower does not have to rely on a life extension,
Other features for selecting the appropriate debt rescheduling loan are flexible repayment options. If premature repayment is possible without calculation of prepayment interest according to the loan agreement, bank customers can also repay the new loan and reduce interest costs again while interest rates continue to fall. Equally advantageous is an entitlement to an occasional installment break, which allows loan agreements partly once a year or at least once within two calendar years. The use of an installment suspension prevents the borrower from being in default of payment due to additional expenses or having to apply for another loan to pay the loan installments.
Bank customers who repost an existing loan and at the same time settle the repayment credit ensure a sufficiently long repayment term. An excessively short term, due to the associated high monthly installments, easily causes the bank customer to claim the same again to clear the loan.
The rescheduling of a credit with a weak credit rating
Even with a weak credit rating, consumers can in principle replace an existing credit. Whether a savings in interest rates is actually possible is shown by the comparison of current loans with the terms of the existing loan.
For many banks, a soft negative private credit feature is already a reason for rejecting credit without further examination. However, individual financial institutions decide on a case-by-case basis, so that even though the credit rating is poor, it can also be obtained through a domestic financial institution. It is also conceivable to take the new loan together with another applicant or to propose to the bank the provision of a guarantor. The inclusion of a bank loan without private credit at a Swiss financial institution is due to the fixed loan amounts of 3500 and 5000 euros and because of the very high interest rates is not a useful form of debt restructuring. However, advisable is the involvement of a reputable credit intermediary, if bank customers want to convert a loan. The service provider mostly arranges a debt rescheduling loan even in difficult cases. Costs for his activity are only incurred in the case of actual lending.
If bank customers want to repatriate their existing loan because they need less credit, they have an organized personal loan in addition to bank loans. Such is not completely ruled out in the event of planned rescheduling of interest savings, but is more difficult to obtain due to the approach of many private lenders. A large part of the persons registered as lenders on the relevant credit exchanges are strongly oriented towards social criteria in the award decisions. Relevant members are less willing to sign a rescheduling request because of hoped-for interest rate savings than one with the aim of reducing lending rates due to reduced income or additional expenses.