Financially, it can get a little bit tight for everyone. Even if there is a good income, there will always be situations in life in which more money is needed than is actually available. This usually happens when unannounced expenses become necessary. For example, when a repair is due or an investment in the future is to be made.
If the additional capital is only needed for a short time, the overdraft facility can be used, which connects to the checking account and is available as a call credit. If a little money is needed, this can simply be obtained from the overdraft facility without having to apply for an additional loan. This makes a spontaneous decision possible.
However, the use of the MRP also has some disadvantages. The effective interest rate for the overdraft facility is very high and therefore also strains the available budget. Between 10 and 13 percent of the used disposable must be planned for this. If you then fail to quickly compensate for the overdraft facility, you pay a lot of money for the convenience that you enjoyed in advance. Therefore, many consumers choose to take out overdraft facility loans in the event of a long financial shortage.
Inexpensive and quickly taken up – the installment loan
An installment loan is best suited for settlement as a loan for overdraft settlement. The installment loan can be adjusted exactly to the required loan amount, has no upper limit and is also not earmarked. You do not have to tell the lender what you want to use the money from the loan for. However, if you need to borrow a large amount, the question of how to use it can come up anyway. Here you should make a vague statement and not be too “questioned”. Banks do not like to spend money to give the borrower the opportunity to settle debts. Therefore, try to name another purpose or to leave the question open. Not that you get the impression that you are not creditworthy.
You already get a credit for overdraft facility compensation in the form of an installment loan on very good terms. If you have a good credit rating, it may well happen that the effective interest rate is below 3 percent. In order to be able to make such a bargain, you should compare different offers with the help of a comparison calculator. We also recommend that you do not take out the overdraft facility loan from your house bank, since you are very likely to use the overdraft facility and the house bank could take advantage of your “emergency situation”. It will most likely not make a good loan offer to you since it has little interest in making up for your overdraft facility. After all, it earns well from the interest you have to pay every month. And the installment loan goes hand in hand with a significantly lower interest rate.
Pay attention to flexibility
If you decide to use a credit to offset the overdraft facility, you should always ensure that you have sufficient flexibility in repayment. Even if it is very likely that it will only be a small loan that you have to apply for as a credit for the overdraft facility, it is important that you keep as many options for repayment as possible.
It is always very nice if you can make free special repayments. These allow you to flow additional money into the loan. As a result, you can pay off the loan faster and pay less interest.
If you are moving in the context of a small loan, you should not let any residual debt insurance pamper you. Better find a guarantor who can help you if necessary. A residual debt insurance only costs a lot of money and makes your loan unnecessarily expensive.
Also make sure that you do not use the overdraft facility again during the repayment from the credit to the overdraft facility and if possible do not incur any other debts. It is better to clear the current debts first before increasing the existing ones, so as not to end up in overindebtedness. In that case, there will be no credit to help you get out of this predicament.