Many consumers are burdened with loans that have been taken out in order to be able to implement long-cherished wishes, important projects or large investments. If these loans can be repaid quickly, since the loan amount is short and the term is short, they are not a major problem. They disappear from life just as quickly as they entered it.
However, if the loans are large and have a very long maturity and the budget has been over many years, it can sometimes be advisable to consider rescheduling existing loans after a few years. Because there is always a lot of movement in the financial sector, which can also be determined in the effective interest rate, for example, if you do not react here, you will sometimes have to raise more money to repay the loan than would actually be necessary.
When it makes sense to reschedule existing loans
Debt rescheduling is always a good idea if you can save money with it. The effective interest rate is constantly on the move. What was advertised as a cheap effective interest rate when the current loan was taken out no longer has to fall into this category. The banks keep coming towards their customers and offer ever better loan offers. On the one hand, competition forces them to do so. On the other hand, the banks themselves get their money so cheap that they can pass it on cheaply.
Therefore, check what the current effective interest rate you have to pay for the current loan is. Then find out about the current interest rates and decide whether debt rescheduling would be an option for your loan.
This is the easiest way to reschedule existing loans
Before considering debt rescheduling, you should seek out different offers from other banks. You also have to check whether the current bank enables you to reschedule a debt, i.e. to prematurely redeem the current loan. As a rule, this must be agreed in writing when applying for the loan. Therefore, take a look at the loan agreement to find out which regulations have been made with regard to special payments, early redemption and debt restructuring.
If such an option has been considered from the start, it may well be that you will not incur any additional costs for rescheduling existing loans. This means that the bank accepts free special repayments and therefore free early redemptions.
If this is not the case, fees for rescheduling will be incurred by the old bank. You must find this out in advance in order to be able to calculate exactly the conditions under which a debt rescheduling of current credit must take place so that it is worthwhile. If the fees are very high, the lower interest rate that you may be offered with a new loan may not be enough to cover the fees. So you save nothing and the effort with the debt restructuring is not worth it.
Furthermore, you should always have signed a new loan contract with the loan amount required for the debt rescheduling before you cancel the old contract. Every now and then it happens that, for reasons of creditworthiness, no new loan contract is concluded. If you had already terminated the old contract in advance, you would have to look in such a case where you can quickly get the money you need for the transfer. Not an easy task, which will not only require a lot of nerves, but also an extremely large amount of money. So wait before you cancel the old contract and only do so when you have the firm commitment in the form of a new signed loan contract in your hands.
Also inform the old bank that you want to reschedule the current loan. It is not uncommon for them to submit a new loan proposal, which does not necessarily have to be worse than the offers that you receive from other banks and savings banks. Compare exactly and pay attention not only to the effective annual interest rate, but also to the most flexible repayment options possible. Because who knows: Maybe you want to reschedule the new loan agreement at some point.