Loans with large amounts of credit are often associated with long terms. Interest is fixed during the term. Above all, this should provide planning security for the borrower. However, he cannot benefit from interest rate cuts during this time. However, lending rates are subject to constant change.
They are based on economic and fiscal factors. Interest rates can fall sharply due to decisions by the Capital lender or difficult framework conditions for banks. In this case, debt restructuring is usually an option. A cheap loan for debt restructuring is offered by both branch and direct banks. When rescheduling, the existing loan is replaced by a cheaper loan.
Requirements for debt restructuring
A cheap loan for debt restructuring is not limited to a lower interest rate. At this point, other characteristics such as possible loan amounts and the framework conditions for special repayments are decisive. Special repayments are a good way for a borrower to pay off the debt burden faster and more flexibly.
A cheap loan for a debt restructuring should realize these special repayments free of charge or at least very cheaply. Debt restructuring is not an option for every borrower. In principle, the bank will also carry out a credit check on this financing. If the credit rating has deteriorated, the interest rates can be worse in this case than for the existing loan.
Credit check for debt restructuring
If a cheap loan is taken out for a debt rescheduling, the bank examines all the collateral of the borrower. This is done using different options. Most banks use a Credit Bureau query. If a loan without Credit Bureau information is preferred, it is often necessary to calculate with higher interest rates.
Proof of salary and account sales of the applicant are also important for the credit check. Such debt restructuring is usually difficult for the self-employed and freelancers, since the conditions of the banks are usually worse for them. When applying for the new loan, the confirmation of transfer must be checked. When borrowing, the contract is concluded. Accordingly, notice periods must be taken into account in the existing financing.
When is debt restructuring worthwhile?
Basically, a new loan is taken out through debt restructuring. According to this, consumers are once again entering into a contract. A debt rescheduling is usually only worthwhile if the loan volume is correspondingly high. With low loan amounts, debt restructuring is rarely worthwhile.
Although the installments that have to be paid monthly are reduced by the term, the total costs increase. For this reason, rescheduling should only be carried out under these conditions if the borrower is in an economic emergency.