Would you like to repay your loan? Are you planning to consolidate and refinance old loans or do you just want to replace an existing loan with a low-interest new loan?
Debt restructuring can be a powerful tool to put finances on a safe footing. But, it can also only be the logical consequence of short-term financing. We support you with advice and action so that you can safely reach your debt rescheduling goal.
Debt credit – serious debt restructuring planning
Debting a loan initially means nothing else than paying old debts with new liabilities. Fundamentally, debt restructuring has the potential to create new liquidity, contribute to debt relief and rearrange finances in a future-proof manner. All three of the above goals can be achieved if the planning phase is properly carried out and a suitable financing model is chosen.
Nevertheless, some things can go wrong. A debt rescheduling can increase the cost of financing costs if “wrong” legacy debts are rescheduled. It can put extreme strain on the household budget if the term of the debt rescheduling loan is not planned in a future-proof manner. Debt restructuring can even lead to financial ruin if a debt rescheduling loan were sewn on edge.
Nevertheless, there is a way out for almost every problem. To reschedule some time and leisure in old loan contracts is part of a successful debt restructuring. The central question is to only reschedule a loan or to refinance several liabilities at once. The liquidity of the household budget and the old installment loan agreements provide answers to the central question.
Debt rescheduling – what should you watch out for?
When looking through the old loans, it is worth looking at the old interest rate level. The current interest rate policy has been running for a long time. It is not said that debt rescheduling is guaranteed to save interest. It would also be important to recognize the agreed terms for loan repayment and any insurance cover. Debt rescheduling is always worthwhile if the focus is on existing short-term loans.
The overdraft rate and partial payment for credit cards are well above the interest rate level of any regular installment loan. If a short-term loan is rescheduled, debt relief through lower interest rates can be assumed practically automatically. The case is somewhat different for old installment loans. Especially if the loan is insured by a residual debt insurance (RSV).
The contributions to the credit insurance were co-financed, but are not calculated back in the event of early loan repayment. Most underestimate how much money is lost through the rescheduling of an insured loan. About 10 percent of the original loan amount – per borrower – was spent on insurance coverage. If the transfer fee is 8,000 USD, approximately 800 USD of lost contributions would be assumed.
It is practically impossible to “bring back” so much money through a new, lower interest rate on the debt rescheduling loan.
Term – future-oriented debt rescheduling
With the debt restructuring, the cards are shuffled again. The amount of the loan would be determined by adding the transfer fees. If future loan requirements can be estimated at the time of rescheduling, the money should be co-financed at the same time. A free credit comparison then helps to be able to more easily assess current interest rates and the optimal term.
Many make the mistake and “sew the debt rescheduling loan on edge”. You choose a rate that you can just barely manage from the current perspective. Without being noticed, they are laying the foundation for future loan requirements. There is a golden rule for the measurement of future-oriented rate levels. Overall, no household should commit more than 10 percent of its net disposable income in installments.
Trick with the savings book – make debt restructuring safe
Of course, the stated rate is not the benefit limit of the household budget. At least one third of the actual installment payment is also transferred to a savings book. Due to the low installment payments, the term has risen extremely. If there are savings reserves of around one year in the savings account, the loan can then be repaid more quickly through occasional special repayments.
The savings credit also prevents unexpected costs, such as the replacement of the TV set or a car repair, from leading to new credit requirements. At the same time, it ensures that in the event of short-term unemployment – even without an RSV – the installments can still be paid safely. Debt rescheduling without RSV does not become an incalculable risk. If the savings balance and transfer fee are the same at the end, the credit is used for early loan repayment and debt relief would be done.
Funding Problems – No Credit, Now What?
Debt rescheduling is easy when regular lenders vie for credit. This is only the case if the personal credit line has not yet been reached and the creditworthiness for lending is guaranteed. Across Europe, credit institutions may only grant “safe” credit. Unfortunately, many borrowers only think about debt rescheduling late, sometimes too late. Good advice doesn’t have to cost money in case of problems.
Non-profit debt counselors provide competent, open-ended advice and free of charge. If the debt counselor advises on rescheduling, reputable loan brokers offer access options to the debt rescheduling loan.
Debt rescheduling loan in difficult cases
The terms “serious” and “credit broker” do not contradict each other when cream bank takes over the credit brokerage. Neutral studies on cream bank support the generally good reputation.
Debt rescheduling via cream bank can be possible with a private loan or from a credit bank. Keeping both ways open is urgently advisable for debt restructuring requests with poor credit ratings.