Interest rates have dropped regularly in recent years, making existing loans significantly more expensive than new contracts. For this reason, a loan to save money can be saved. In addition, debt rescheduling is advisable if the customer is dependent on reduced rates and the current lender refuses to extend the term.
Processing a loan to be paid off
Before the customer signs the contract for a loan to be repaid, he makes a careful loan comparison. In doing so, he not only considers the accruing interest, but also pays attention to further loan conditions such as the possibility to suspend the installment and the right to free special repayments. At the same time, when examining whether a new loan agreement is worth repaying, borrowers must not disregard the early repayment fees that may have to be paid for the early loan repayment.
The new contract partner wants to make sure that his customer uses the loan as a replacement and not as an additional loan. The budget calculation he makes is based on the fact that the borrower actually repays the existing liabilities with the new loan. Only a few financial institutions are satisfied with the promise of their customers regarding the use of funds in the event of a planned replacement. Rather, it is common that they do not transfer the loan intended to settle existing liabilities to their customer’s current account, but directly to the existing credit accounts. For this purpose, the borrower submits a list of the loans to be repaid, and the corresponding amounts are obtained from his current creditors beforehand.
The partial amount intended to compensate for the negative balance in the checking account is of course received in the event of a loan repayment. This also applies to any increase that may be associated with the loan repayment and for amounts in which the current creditors do not accept payments from third parties, which is the case especially with some credit card issuers. Consumers understandably do not want to include cheap loans such as car loans on a loan to settle existing liabilities.
However, many lenders insist on taking into account all of the liabilities apparent from the Schufa information and only allow exceptions for any existing real estate loans. The Schufa information does not indicate the extent to which the overdraft facility and the credit line of a credit card account are used. Nevertheless, the redemption of these liabilities is indispensable, since they are associated with above-average borrowing rates.
What consumers pay attention to after the loan repayment
Bank customers make sure that they do not pay the installment loan installments within a short period of time by reusing their overdraft facility. Ideally, they will no longer take advantage of this before the debt is fully repaid, or only for a few weeks. The credit card should also only be charged with the amount that can be settled immediately after receiving the monthly credit card statement. The re-use of granted credit lines following debt restructuring can be effectively avoided by agreeing on a sufficiently long loan term.
Account holders can have their disposition limit lowered if they fear they will soon be used again. Orders in retail on an installment payment basis remain possible after the loan has been redeemed, especially since, unlike a bank, the retailer does not find out from the Schufa information whether credit liabilities already exist. However, they should also only be made in exceptional cases, so that various liabilities do not have to be serviced again within a short time after the debt rescheduling.