Would you like to replace an existing loan with high interest rates? The time for this would be favorable. Low interest rates, at least it seems, have bottomed out. There is only one unanswered question: When will the key interest rates rise again?
We would like to help you to put your debt restructuring on a healthy footing. It is not economically sensible to reschedule every old loan with high interest rates. Find out when debt restructuring is worthwhile, what to look out for and which debt restructuring loans are suitable.
Loan with high interest rates – debt relief
Exchanging an existing loan with high interest rates is what people want above all in view of the debt-rearing effect of debt restructuring. In principle, every household would be advised from time to time to examine the finances. Rescheduled debt can save credit costs, adjust maturities and rate levels. In addition, the debt rescheduling creates “order” in the payment obligations.
Every debt rescheduling takes some time and effort. Old contracts have to be put together. It is particularly important to study the credit conditions regarding early repayments and to make sure that there are side agreements. In addition, an RSV could be completed, for example, or the debt restructuring is influenced by restrictive credit conditions.
In addition, the transfer fees should be known on the key date. A particularly expensive loan is unfortunately forgotten on the list. The disposition should be at the top of the list. It is the epitome of the interest rate trap when borrowers want to replace their old loan with high interest rates. He is forgotten, because the red numbers are already part of the everyday life of many dispo users and the house bank does not press for repayment.
Regular debt restructuring – good score
In households with a secure income and adequate debt, old debts affect creditworthiness far less than many borrowers think. The score reacts with violent fluctuations if payment obligations are not met or new life situations arise. Existing, correctly serviced credit hardly reduces the creditworthiness for pure debt rescheduling.
On the contrary, when borrowers replace old loans with high interest rates, debt rescheduling has been preceded by a long repayment phase. The total debt is reduced. The debt rescheduling loan is lower than the sum of the loans originally taken out. The proven repayment reliability over a long period of time also increases creditworthiness.
A comprehensive overview of possible loan offers is provided free of charge on-line loan comparisons “free, so to speak”. Applying for credit comparisons is largely self-explanatory and known. Velocity indent is new. If the debt rescheduling is to proceed quickly, ID verification via video ID can save the way to the post office and save a lot of time. With a good credit rating, the debt rescheduling could be completed within 48 hours.
Debt restructuring weaknesses – RSV cost trap
Not every loan with high interest rates is suitable for being replaced by a loan with a lower interest rate. The effective annual interest rate shown in the old contract does not necessarily include all actual costs. A well-overlooked pitfall when debtors pay off loans with high interest rates would be the credit insurance of the old contract. Roughly estimated, the RSV (residual debt insurance) devoured about 10 percent of the loan amount in contributions.
What many do not know is that only interest already included in the loan amount is calculated back. However, the contributions paid to credit insurance are not. Unused premium payments are neither refundable nor transferable to the debt rescheduling loan. Due to the premature loan repayment from equity, the loss of insurance coverage may be bearable.
When a debt is rescheduled, the credit risk does not disappear, it is only transferred to a new loan. As a consequence, it would have to be reinsured. One thing is certain: the interest gain when borrowers replace their old loan with high interest is not enough to cover the loss of premium. From an economic point of view, the refinancing planned for debt relief would be a loss-making business.
Overwhelmed with debt restructuring?
Planning a debt rescheduling correctly determines whether the refinancing will pay off. If other factors are added, such as poor creditworthiness, payment problems in the past, … it becomes confusing. If in doubt, we advise planning the debt rescheduling together with a debt counseling center.
Non-profit debt counseling centers can be found all over Germany. The help is free and guaranteed serious. It would be advisable not to offer offers from the credit brokerage sector that sound similar. If advice is actually given free of charge, neutrality cannot be guaranteed.
Installment loan despite poor credit rating – regain liquidity
With low liquidity, high interest rates on old loan obligations are not the most important reason to deal with debt rescheduling. A lack of liquidity leads to investment backlogs. High monthly rates literally suffocate the household budget. In this situation, it is not a matter of catching a small interest advantage, but of fundamental changes in financial planning.
For borrowers who want to replace old loans with high interest rates and those who want to regain their liquidity, good lender offers starting points. The credit brokerage portal integrates a very comprehensive free credit comparison for debt restructuring with a good credit rating. Brokerage costs are not incurred for borrowers for bank loans that are brokered via the good lender credit comparison.
With the offer to provide serious credit from private to private, good lender appeals to people with weaker credit ratings who are willing to reschedule. Loans that replace old loans with high interest rates in order to get out of debt would be conceivable via private lenders. What is certain is that the newly adjusted maturity of the debt rescheduling loan means that lost liquidity can be recovered.