Anyone who has taken out a loan with a long term and thus a high loan amount will be very interested in keeping the costs associated with the loan within a manageable range. Therefore, when taking out the loan, it must be taken into account that debt restructuring may be sought during the term. Because this enables you to benefit from lower interest rates and significantly reduce the cost of the loan. In many cases, long-term loans that have existed for a number of years have significantly higher interest rates than the current interest rate level provides. If debt is cleverly rescheduled, the costs can at best be reduced by several thousand USD.
Debt cheap debt – so everything works smoothly
If a long-term loan was taken out a long time ago, the chances of it having a relatively high interest rate are relatively good. Often it is construction finance or very large installment loans that have such a term and a correspondingly high interest rate.
If you then realize through a little research that the current loan offers are significantly more flattering and cheaper than what you have to serve yourself, the desire for rescheduling is quickly quite high. With debt restructuring, the expensive old loan can be replaced by a cheaper new loan.
If you are planning to do this, the first step should be to look for suitable new loan offers. For this it makes sense to check the current creditworthiness by asking Credit Bureau. Because the loan offers that the banks and savings banks submit are always based on the interest rate on the creditworthiness of the borrower. It must also be determined how high the current debt burden is so that the new loan can be provided with a corresponding loan amount. With this information in your luggage, you can then search for a suitable loan offer that should be so cheap that a debt rescheduling is really worth it.
Rescheduling credit cheaply – what must be considered?
If you want to reschedule a loan, you have to be aware that this can take some time. Because various offers should be compared in advance before the next loan contract is signed.
In addition, the bank, which wants to approve a loan to be debt-rescheduled, will check very carefully the creditworthiness of the borrower before lending. In doing so, she will encounter the currently existing loan in the Credit Bureau, which must be explained plausibly, as it reduces the creditworthiness and raises the effective interest rate for the new loan. However, if you indicate that the existing loan should be rescheduled by the new loan and that the existing loan will then be canceled, the bank will be able to understand this and adjust the new offer accordingly.
On top of that, transfer powers must be available so that the bank of the new loan can also replace the old loan. In the case of a loan, debt rescheduling must be clarified as to whether early repayment is possible at all and what possible costs are involved. However, these costs can be kept low in advance if rescheduling in the form of a fixed interest rate has been agreed for a certain period in the old loan agreement. If this is the case, the old bank cannot charge any penalty fees for the early redemption and the loan will be rescheduled at a reasonable price.
Important: The old loan contract should only be terminated when the new and cheaper loan contract has been signed. Before there is no signature, the bank can still withdraw its loan offer. If this happens, you are left without follow-up financing and may have to take a significantly less favorable offer. To prevent this from happening, the new contract must always be signed before the old one can be canceled.