Loans are something completely normal today. If our grandparents still lived with the thought that one should buy things only if one has saved long enough for it, the changed monetary policy of the European central bank (ECB) of the last years led also in Germany to a rethinking.
Because today it is cheaper than ever to take out a loan. Saving money, however, is hardly profitable – on a classic savings book there is almost no interest and even call money accounts come today with very low interest offers therefore. It's no wonder that buying in installments is more modern than ever.
However, even though loans are generally very favorable today, not every loan offer has to be equally good. Many a car loan you may have taken out in recent years would have turned out better with a loan comparison here. Even the overdraft facility, which many consumers still use, is a very expensive way of borrowing money. But you can escape expensive loans today, fortunately, relatively easily – by simply rescheduling sensibly.
Rescheduling is fashionable – but does it always make sense??
The short answer is: No. It doesn't always make sense to restructure a loan. In principle, rescheduling means nothing more than taking out a new loan to pay off an old loan. Only if the new loan is cheaper than the old loan, it really leads to a saving and is therefore worthwhile. The interest rate you are offered will matter.
Credit expert tip: Pay attention with a credit absolutely to the basic conditions. Do you have to take out residual debt insurance for the loan so that the bank agrees to grant the loan? This costs you additional money. The amount of residual debt insurance is added to your loan as a loan amount and is paid in one lump sum to the insurance company when the loan is paid off. This increases your monthly burden, although you yourself have never held the money for the residual debt insurance – on the other hand, such a residual debt insurance can be important if you are not otherwise, for example, by a good term life insurance secured.
For example, if you want an old loan where a loan amount of 20.000 Euro is open and which comes along with an interest rate of 5%, an offer with 4.5% interest seems good at first sight. However, if you have to borrow around 20.000 euros to obtain a residual debt insurance, for example, with 2.000 euros, the new loan amount increases to 22.000 euros, which, of course, even with a lower interest rate, may mean that the burden is not noticeably reduced.
Ultimately, the most important thing with a debt restructuring is that the conditions of the new loan are, on balance, more favorable than the conditions of your previous loan.
In which cases can you basically assume that a debt restructuring makes sense?
At this point, we at Kreditxperte have compiled three situations in which a debt restructuring makes sense in any case. Basically, it is best in these situations to take a look at our loan calculator and check the best loan offers for a debt restructuring loan via the loan comparison here. In the following situations, the result might actually surprise you:
- In the case of loans with creditworthiness-dependent interest rates in the event of an increase in income
- If your loan has already been running for a few years
- In the case of a general drop in interest rates
1) Your income has increased?
This can be especially noticeable if you previously had a loan with interest rates based on creditworthiness. Because these are inherently dependent on your monthly income in the first place. The higher your credit score – the financial resources you have available each month – the lower credit-related interest rates will be.
So if you took out a loan when you were the sole wage earner and your partner now has a job as well, or you or your partner got a hefty raise, that usually leads to a higher credit score. That, in turn, earns you lower interest rate offers. A loan comparison is definitely worthwhile at this point.
In addition, you can also increase the credit rating with another borrower. Read the following article in the Kreditexperte Ratgeber.
2) You have already been paying off a consumer loan for several years?
Most consumer loans are annuity loans. This means that at the beginning of the loan term, a rate has been calculated based on your repayment rate and your original interest rate. In most cases, the concrete amount of the interest rates has two causes:
Credit expert tip: An exception to this rule are loans with creditworthiness-independent interest rates. These have a fixed interest rate – regardless of your income. If you have a top income, you'll fare better with a credit-based loan. In the case of a medium or low income, creditworthiness-independent loans are generally more favorable.
Close now a credit over 15.000 euros with a term of 10 years, interest rates of around 8 percent are perfectly normal for a traditional house bank. This means that in addition to the necessary repayment, you will initially have to pay interest in the amount of 1.200 euros a year must be carried. Thus a monthly rate around the 180 euro can result fast.
If you have been paying off your loan for four years now and still have a residual debt of around 10.000 euros, you have the chance to achieve a lower interest rate over the term in the event of a debt restructuring. If you set the new term to 6 years and thus achieve a reduction in your interest rate, this also automatically leads to a reduction in the total rate that you have to pay each month.
3) The interest rates have generally changed
For several years, interest rates are no longer falling, but rather move sideways – that is, there are hardly any noticeable changes. This is ultimately due to the fact that interest rates have now reached a low that can hardly be undershot. The monetary policy of the ECB has made this possible – a change of this policy is not in sight either.
But anyone who took out a large consumer loan five or six years ago and fixed it for ten years was still borrowing money at a time when interest rates were higher than they are today. A comparison of the current interest rates for a debt restructuring loan therefore makes sense in any case.
By the way:
If you have taken out a consumer loan with your local bank, it is generally advisable to check the offers for a debt rescheduling via the loan calculator. Here you find in many cases clearly better offers, than they are submitted by most house banks.