A loan to repay debt is not an empty advertising promise given the lowest interest rates on debt rescheduling loans.
But what is important? Is it generally worth rescheduling or can the debt rescheduling loan become a risk? The following guide summarizes these questions and other interesting information for you.
Loan to repay debts – save properly, reschedule the overdraft facility
Short-term loans, the overdraft facility or the credit card, seduce consumers. Almost every citizen knows red numbers on the checking account. The repayment is not as easy and seductive as the overdraft facility allows the overdraft. Despite all the savings efforts, the account does not want to go back into the black. After a while of unsuccessful efforts, account holders give up and accept their fate or reschedule.
Many debtors are not aware of how much money a loan to pay off debt in this case is unaware of. Statistical figures show that people who regularly overdraw their checking accounts are indebted to your house bank with around 3,000 USD. The overdraft facility is not cheap. The German Company measured up to 17.5 percent overdraft interest in Germany. If the above figures were used as the basis for calculating a small loan for debt repayment, the full impact would be evident.
Via the loan comparison, 3,000 USD can be converted into an installment loan with a term of 36 months. The monthly installment costs around 86 USD. The bank calculates a total of 92.08 USD in financing costs in three years. For better clarity, simply divided by three (without compound interest calculation) corresponds to an interest burden of USD 30.69 a year. The overdraft facility in the same amount, at 17.5 percent overdraft interest, costs 525 USD per year. With 43.75 USD in monthly financing costs, it would take almost 6 years (again without compound interest calculation) to deduct the overdraft facility with 86 USD. The installment loan for overdraft rescheduling deserves the title loan for debt repayment.
Loan summary – gain new liquidity and save interest
It is only advisable to question the old loan obligations every few years, to ask for the transfer fees and to reschedule them. The effective interest rates when lending the old loans were based on the creditworthiness at that time. The total liabilities were higher, which increased the credit risk and the effective interest rate at the same time. A debt rescheduling loan summarizes the remaining debt.
The bottom line is that the amount to be financed is significantly lower than the original loan amount. The credit risk decreases, the credit rating rises and has a noticeable impact on financing costs through lower interest rates. It is also possible to obtain additional liquidity through the loan to repay debt. The signs are back to the very beginning for the new loan. With an extended term, the monthly installment is reduced, the liquidity in the household budget increases.
Plan your debt rescheduling seriously and save
Nevertheless, small installments and a long term do not automatically have to satisfy consumer wishes. Serious credit planning always takes current life risks into account. Insurance for the bottom line is rarely worth it for policyholders. The bank and the insurance company mainly benefit from the RSV.
Serious planning of small installments leaves enough liquidity to be able to pay securely even in difficult times. If everything goes smoothly, special repayments allow unused money to be used for faster loan repayment. For the loan to repay debt without RSV, we recommend a long-term loan. The right to free unlimited repayment is stipulated in the credit terms.
When is it not worth rescheduling?
With existing installment loans that have not yet been running for a long time, the effects mentioned above are only very slight. Not much of the actual loan amount could be repaid in a short period of time. This means that debt restructuring has practically no effect on a measurable improvement in personal creditworthiness or the interest rate offered.
Those who rescheduled an existing installment loan with residual debt insurance do not take out a loan to repay debt, but a loan to increase risk. The residual debt insurance cost about 20 percent of the loan amount in the form of insurance premiums.
This money would be wasted because the RSV is not calculated back and cannot be transferred to a new loan.
Whoever gives a loan to repay debt – good and normal creditworthiness
With average creditworthiness, debt rescheduling requests can be seen primarily under the sign of interest savings. A simple credit comparison of regular loan offers shows how much money can actually be saved through the current low interest rates.
However, only those willing to reschedule debt with the best credit rating should be guided by interest rates dependent on creditworthiness. The low entry interest rate, popularly known as the “shop window rate”, is primarily reserved for civil servants and other workers employed by the state.
For ordinary people, offers of fixed interest rates with an effective interest rate independent of creditworthiness are of particular interest. Individual differences in creditworthiness are not important if the creditworthiness is sufficient to grant a loan.
Debt repayment loan – difficult creditworthiness
It is difficult to reconcile debt restructuring with poor creditworthiness with debt repayment of future debt through interest savings. Only a few credit institutions grant a debt rescheduling loan with a restricted credit rating.
Only the pointed pencil and the calculator can prove whether the debt restructuring will pay off.
The better alternative for the loan to repay debt with poor creditworthiness offers the loan from private. Thanks to the Good Bank’s zero interest rate policy, private investors are in a predicament. You have to invest your capital as it loses purchasing power on the savings book every day. A loan to repay debt from private to private could be the solution for both sides.