Ever lower interest rates and significantly rising offers entice many consumers to reschedule their existing loans. But when does it actually make sense to repay a loan? We clarify these questions in this article.
Does it always make sense to repay a loan?
Debting a loan means, for example, that you are repaying several loans and are debiting the respective remaining debt of these loans into a single loan.
This may significantly reduce fees and borrowing costs. But even a single loan can be rescheduled if, for example, you get significantly better conditions than at the current bank.
Debt rescheduling loans are usually good business for banks, which makes it easier for you as a consumer to get a new and good deal. But be careful: If there have been payment defaults at the current bank in the past, the chances are no longer so good at the new bank.
When a debt rescheduling makes sense
Basically, it can be said that debt rescheduling always makes sense if a new loan is significantly cheaper , taking all costs into account. However, the costs include not only the costs of the new contract, but also the so-called prepayment penalty , which has to be paid to the old bank. This is a fee that is due as some kind of compensation for terminating the loan agreement early. Your current loan agreement states whether and to what extent this prepayment penalty is due.
Tip for prepayment penalty
If your loan runs for more than 12 months, the bank may charge you a maximum of 1 percent of the remaining debt as compensation. However, if the term is less than 12 months, it is only 0.5 percent. This applies to all contracts that were concluded after June 10, 2010.
Determine the total cost of the old contracts
To calculate whether rescheduling one or more loans makes sense in your case, you need to take the following into account:
- Calculate the costs that are due until the end of your current loan or your loans.
- Determine the prepayment penalty for each loan.
- Get a debt rescheduling offer including all costs for the entire term.
- Compare the costs of your previous loans up to the end of the term (including prepayment penalty) with the costs that would be incurred for the new loan for the entire term.
Now it is very simple: If you have less costs with the new offer on the total term than in the remaining term of the previous loans, then a debt rescheduling makes sense in your case.
This is how a debt rescheduling works
1. Does the debt rescheduling make sense?
As mentioned above, the first step is to check whether rescheduling the loan makes any sense in your case. Use the above calculation for this. Ask the bank for a transfer certificate. There, all costs including prepayment penalty are added up to the end of the term. If you want to reschedule several loans, all you have to do is add up the total costs of the respective transfer certificates.
2. Obtain credit offers
Now you can get new loan offers. So that they are actually cheaper, you should get an offer for an online loan instead of going to another bank branch. The big advantage is that you can also carry out a neutral loan comparison directly online and the comparison calculator determines the best offer for you from several banks.
To use the loan comparison, you only have to specify the required loan amount, the term and the purpose of “debt rescheduling”. The loan amount required should then correspond to the redemption costs of the other loans. However, some also add a little more money because they may be planning a new purchase.
It is important that the new bank knows that you want to redeem the existing loans. Otherwise, a cancellation could quickly occur if the bank is not aware of this. In the meantime, however, the technology is already so far that the new bank can already see your existing loans.
3. Take out a new loan and cancel the old one
If the conditions are right for you, you can take out the new loan directly online. An adviser to the bank or the intermediary may contact you again by phone. You can also clarify directly with the new bank whether it will cancel and redeem the old loan. As a rule, this is usually offered as a service.