Debt rescheduling is usually always an option when an existing loan is canceled and the remaining liabilities are combined in a new – cheaper – loan offer. This usually happens with large real estate loans, which are very often only granted with a fixed interest rate of 5, 8 or 10 years and therefore allow the borrower to reschedule after the deadline. Such a debt rescheduling opportunity can be a great financial relief for the borrower. Because the offers around the loans are constantly changing. Banks and savings banks are continually creating new loan models that are even closer to the interests and needs of borrowers.
In addition, the current interest rate is also very low due to the very low key interest rate that the Cream bank issues. However, anyone who took out their loan a few years ago could not yet benefit from this low interest rate. However, if he does this now, he can save a few thousand USD on the entire loan, which he does not have to pay to the bank in the form of interest payments.
In order to be able to properly reschedule an existing loan, a certain procedure is required, which we would like to explain to you here.
Check your credit rating and the old loan agreement
Before you can start to think about where and how you will repay the loan, you should first check your personal requirements. In the first place is always your credit rating, which must be so good that debt restructuring can be considered at all. Please ask your Credit Institutions for this. You can do this free of charge once a year. Also check your income and expenses. If the Credit Institutions is positive and there is enough money to service the loan, you can assume a good credit rating that will pave the way for you to repay the loan.
Secondly, you have to check the old loan agreement to see if it allows a loan to be repaid. To do this, the bank must have agreed to free special repayments and an early redemption in writing. If that is not the case and you insist on debt restructuring despite everything. It will be very expensive for you. The bank will then in turn charge you a fairly high prepayment penalty, which is sometimes so generous that rescheduling is no longer worth it because the penalty would eat up all the savings from the rescheduling.
Once you have gained an overview of this, it is important to compare different offers.
Compare, compare and compare again
Finding a suitable new loan for debt restructuring is not that easy. After all, you want to achieve the best possible savings. And you can only do that if you compare different offers.
Use a loan calculator for your comparison, which you can find on the Internet. It takes a lot of work off your hands and ensures that direct inquiries to the banks do not leave any unpleasant traces in the Credit Institutions or in the data systems of the banks. When comparing, always pay attention to the effective interest rate and not the borrowing rate. The effective interest rate also includes all fees relating to the loan, while the debit interest rate only reveals the interest rate applied.
If you have found a good offer, it is important to secure it. Enter into direct negotiations with the relevant bank and emphasize that you need the money for a loan to convert into debt. The old bank often creates a new loan proposal when it learns that you want to repay the loan. Please also check this offer very carefully. It might well be because the bank has little interest in you switching.
First sign the new loan agreement
Before you cancel the old loan contract and make the debt perfect, it is very important that you sign the new loan contract first. You can only terminate the old contract if you have a firm loan commitment by signing a loan contract. Should the new bank withdraw from its offer, in the worst case you would be left without a follow-up loan and would have a huge problem. Because the old loan has already been canceled, the entire remaining amount must be paid for the trigger. If this is not available, there is an inevitable risk of over-indebtedness.
By the way: The new bank will be happy to reschedule your debt. Give her permission to redeem the old loan directly with the money from the new loan. You then do not have to worry about anything and just change the recipient when paying in installments. The rest of the work is done entirely by the new bank.