An existing loan can certainly be replaced with a new loan. The reasons are manifold and actually easy to carry out. At the current low interest rate, it can be quite worthwhile to replace an old loan with unfavorable conditions. With a calculation of interest rate and fees, a borrower can save a lot. But even who has several loans to serve, can replace with a loan with new credit.
Replacing a loan with new credit
The low interest rate, inheritance or other funds that flow unexpectedly, tempt a borrower to replace a loan with new credit. Generally this is also possible at any time. However, there are some conditions that must be met and that could turn out to be negative if the borrower fails to comply. Currently, interest rates are at a real low. This is not such a thrilling occasion for savers and investors. However, it is pleased borrowers and builders who can replace with very good conditions for a loan with new credit. Anyone who thinks about his old loan agreement, which the borrower still pays off, is left with the conviction to take out a new loan.
The whole procedure could then be declared as rescheduling. But there are borrowers who have multiple loans to pay and are struggling to pay the installments. There are already warnings fluttered into the house, which also does not leave a soothing impression. Here is the option to replace a loan a good decision. When talking to a bank about this problem, many lenders want to remit the outstanding loan to the creditors themselves. Thus, the lender has the security to stand with his demands in the front row.
Basically, this is also a debt restructuring, which can bring a positive result. However, this procedure should only be carried out if there is a reduction in the installment amount and the loan with new credit has good conditions. If you have multiple loans from different banks, you should have the credit check with the bank where you want to deposit all your future obligations. The right time to replace a loan with a new loan, is when the remaining term has a longer period of time.
Before a loan is replaced with a loan, the loan seeker should necessarily make a credit comparison. For this is the cheapest provider can be seen, to which the customer can turn. In a credit comparison, the interest rates are visible and often the monthly burden can be displayed. This has the advantage for the borrower that he can replace a loan with a new loan, namely the cheapest and most reliable provider. However, the credit debt has to be reckoned with, so that more money is left in the month.
However, there are criteria for replacing the credit that have to be met. This starts with a private credit query, which asks each bank before a loan approval. The information of the private credit must be positive. Then the customer should ask himself whether he can pay the new monthly installment with an available income. In addition, the new loan must necessarily have better interest rates and repayment terms.
However, if the loan seeker has only a financial shortfall to overcome, he may also let the old loan or the majority of the loan lapse. There are many banks that allow their customers this advantage. However, a deferral is usually only possible after an 11-month payment of the installments. If the payment break or deferment is claimed, the agreed interest will continue and the term will be extended. This option will only be granted to credit agreements concluded after October 1, 2010. The approved deferral may take place once a month. However, certain conditions must be met in order to benefit from a deferral.
But it is not just a loan with a new loan to replace a loan that is supposed to replace an old credit agreement. In many cases, the credit line on the checking account is maxed out and the customer is on target. The worst case would be that no more transfers can be made. The first negative private credit entry, should not be present, would be in prospect. The Dispo, which banks readily offer and offer without any major problems, is the most expensive of all loans. That’s why he should only be used if he can be quickly compensated.
The prepayment penalty
Anyone who wants to take out a new loan should read his old loan agreement carefully. Because many banks require a so-called prepayment penalty for early borrowing. If there is no legal or contractual right of termination, the bank can decide on its own whether the loan can be repaid or not. The prepayment penalty can also be variable and then high. This is important in a real estate loan, who wants to sell and wants a higher loan, but only another bank, so the previous bank can only calculate the actual loss of interest. Likewise, special repayment rights must be observed.
If you start thinking about this and simply want to replace a new loan with a new loan and simply no longer pay for the old loan, then you are certainly in for trouble. Then reminder fees will be added to the outstanding amount. Therefore, it is important to take a look at his old credit agreement. The interest rate, maturity and residual debt of the loan are crucial to how high a savings on a new loan loan really is. But it’s not just credit. If invoices are open at a department store, a mail-order company, at a telephone company or an invoice for executed craftsmen’s work, a rescheduling may also make sense. Another tip: who has some credit to operate and is on the verge of whether a new loan is approved or not, In this case, the borrower should replace a loan with a new loan, as the purpose of “rescheduling” specify in his new loan agreement. From this it can be seen that the customer does not want to make any new debts, but only brings order into his finances.
This approach to replacing a loan with new credit, you will often find in real estate loans. These loans usually have high loan amounts that are not yet paid at the end of the fixed interest period. Then a follow-up financing is due. Consumers may repay after a ten-year term or at expiration of a debit interest, without a prepayment penalty being due. For the transfer of the mortgage then a fee must be paid. Only a few hundred euros will be charged. The savings potential of real estate financing is high, because there are long terms and a high loan amount. Here, the savings can amount to several thousand euros.
If you want to replace a loan with a new loan, you must also comply with the normal conditions. Thus, the income is important, the private credit information should be clean, a permanent position is just as important, moreover, the expenditure should not exceed the revenue.