Financing here, fixed credit there: in our day and age it is not uncommon for us to go into debt and let new purchases enter our lives with the help of a loan. Often it is not properly looked at the conditions at which the loan or financing is actually taken out. The big awakening usually comes only when it comes to paying the debts and it is found that a large part of the monthly installments are devoured by the interest. Then it is high time to think about repaying a loan during the term.
When a loan can make sense during the term
Those who are knee-deep in the overdraft facility, have to use creditors on the right and left and groan the credit card under the accumulated expenses, for which it is high time to think about a loan during the term. It is not uncommon for such a scenario to result in over-indebtedness, which is often only a few steps away.
But even if you have a fairly large loan that you have been repaying for several years and that will continue to accompany you for years to come, it can still be worth thinking about rescheduling. For example, if you have taken out a real estate loan or a car loan.
The conditions for debt restructuring are therefore very diverse and should always be considered individually. In general, however, it can be said that a loan is worthwhile during the term of debt rescheduling if you feel financial relief from the debt rescheduling. Be it because the monthly installments become lower due to a longer term, because you can combine several creditors into one creditor or because you simply find an offer that is equipped with a cheaper effective annual interest rate. It is not critical that a bank offers you debt rescheduling. You can also search for a better loan offer yourself and take debt restructuring into your own hands. You usually drive even better with this approach, because you can choose the new loan and conditions yourself and do not have to trust that the bank will make a lucrative offer for you.
It is not without preliminary considerations
Before you actually reschedule your existing loan, you should make some preliminary considerations and make preparations so that the debt rescheduling can be carried out without any problems. After all, you want to save and relieve debt with debt restructuring. And this will only happen if you take a very targeted approach.
Therefore, first check what the current remaining debt is. If necessary, you should contact the current donor or existing creditors to find out the exact figures. In this context, also find out whether the bank is demanding compensation for the early repayment of the old loan. If so, you have to offset this compensation against the savings in order to find out what real savings will actually result from the debt rescheduling.
Once this has been clarified, you can obtain current offers for a new loan. It is not important that the loan is in debt during the term. Orientate yourself with the required loan amount based on the outstanding amount of the old loan. If additional liabilities have accumulated, these could also be included in the new loan amount in order to leave only one creditor in the end.
If you have found a suitable offer, you should present it to the old bank. They can then consider whether they want to make you a similarly good offer or whether they release you from the loan. Banks often want to keep their customers because they earn good money from them. So it may well be that the old bank offers you a similarly good or even better offer for a loan during the term. If this is not the case, you can terminate the contract as soon as you have the money from the new loan in your hands.
Please consider the following
Record only the amount of credit that you really need. The new bank will certainly try to artificially drive up the loan amount. In addition, think very carefully about whether you really need residual debt insurance. This is only necessary if you call a very large loan in combination with a long term your own and want to protect your family and last but not least yourself with the residual debt insurance.