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A rescheduling of old loans can save you money. Many loans, which were completed before 2016, have higher interest rates than current cheap loans. Favorable interest rates in the current low-interest-rate environment make loan repurchase loans extremely attractive. For a loan rescheduling it pays to compare the effective interest rates of old loans, to catch up on current offers and to pay for everything through a single installment. Nonetheless, there are some things to consider when restructuring debt.

Correct borrowing – that’s important to note

In order to find out whether a rescheduling pays off and how you can easily repost the loans, please note the following 4 steps:

  1. Find your existing loan agreements and record the effective interest rate. According to current Bundesbank statistics, the effective interest rate for personal loans is between 4.5% and 5%; already offers loans starting at 1.99%. If, for example, you pay interest above 6% or even 8%, you should definitely consider rescheduling.

  2. Find out how many euros you pay each month in credit installments. Sum all installment payments to banks to track the current monthly installment. Please also note any additional costs for direct debits, chargebacks or account maintenance fees, which you will pay extra.

  3. Find out about the outstanding balance due on a specified date (eg 2 weeks in the future – the time at which you want to repay the loans). Also, be aware of other costs that may be incurred during the repayment term.

  4. Other costs include the amount of the prepayment penalty. The prepayment penalty for early repayment is regulated by law in §502 BGB. For loans, which were closed after the 11.06.2010 the legal conditions apply. That is, the bank can claim a maximum of 1 percent of the loan amount for a loan over 12 months. Terms less than 12 months are limited to 0.5 percent.

Repay Installment Loan & Repurchase – and pay only one installment

Once you have collected all the relevant information – current interest, monthly installment, outstanding balance, prepayment penalty – you can start rescheduling. You now know what the debt rescheduling loan you need to repay your existing loans. When you apply for credit, you now enter the existing loans, usually the remaining debt and the remaining time as well as the bank account from which you pay the monthly installments. Here, the money will flow from the relinquishing bank, where you apply for the debt repayment loan. Once you have entered all the information, you can complete the application online.

When is a rescheduling worthwhile? Some advantages:

Transparency & financial freedom

If you combine loans with a rescheduling, you have again the choice of how long the term and how large the monthly rate should be. You decide what fits in your budget and what rate you can handle. A longer repayment period will allow you to reduce the monthly loan installment and thus reduce the ongoing burden. A rescheduling is therefore also a good choice when it comes to debt reduction, and controlled. 

Replacing expensive credit lines and saving interest

With a debt rescheduling loan, you can also replace overdraft facilities (“Dispo”) and thus pay lower interest rates. Disposition loans earn an average of 10% pa, which is already 200 € cash in the event of an allocation of 2,000 €, which you can save with a favorable rescheduling. This also applies to installment payments that you make, for example, in online shops or credit cards. Higher interest rates of up to 15% pa may apply here. A comparison of loan debt restructuring can therefore be worthwhile.

Take out a new loan

With a debt repayment loan, you can also take out a new loan and still pay a lower monthly installment. If, for example, you need a new car, but you have existing old loans, it may be worthwhile to combine the loans and to co-finance the new car. Some banks even offer you a new loan, as long as you combine old loans with a rescheduling. This is because the single-rate, lower-interest-rate monthly debt burden presents a more manageable risk to the bank. Rescheduling will allow you to borrow even new loans that you did not previously recognize.

Merging loans, repaying debts, paying a installment

The classic example of a rescheduling: when you consolidate your loans, you have the option to redefine some contract parameters. In addition, various banks offer you free advice and help you to reduce your debt without getting into trouble. Of course, rescheduling also allows you to pay off your debts prematurely, for example, by being able to pay a higher installment through higher revenues and thus be able to get rid of their debts earlier.

Repost mortgage lending and secure cheaper follow-up financing

A rescheduling of mortgage lending can basically take place in three ways:

  • Against a statutory prepayment penalty. Here the notice period is to be considered.
  • After ten years, you have the right to repatriate mortgage lending.
  • After expiry of the fixed interest rate, you have the option of repaying the loan in full or securing a favorable follow-up financing. This may be worthwhile, especially in the current low interest rate environment, as interest rates on mortgage lending are very healthy.

Repurposing old loans, replacing overdrafts: Compare rescheduling loans

A debt restructuring has many possible uses. You should always compare a rescheduling loan, which provider offers you which offer. A comparison of the loans is worthwhile, as a debt restructuring has an above-average volume of credit. Accordingly, higher interest rates have a greater impact on the overall financial burden over the credit period. Nonetheless, a credit comparison for debt rescheduling is worthwhile, as the low interest rates of recent years are playing into your hands.

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