There is currently a low interest rate phase and as a borrower you can save considerable interest on a debt rescheduling. Easily bundle your scattered ongoing loans with a loan provider. This not only makes your financial situation more manageable, it also benefits your credit rating.
Debt restructuring is simple and simplifies your life. After a debt rescheduling, you only have one contact person and you only pay your monthly installments to a loan provider, this significantly reduces your administrative workload and makes your financial situation clearer.
Switch easily to another loan provider
Speaking of the administrative burden, some banks will reschedule your old loans completely and free of charge for you. You don’t have to worry about anything and don’t pay a cent for this service. Remember, the new loan provider wants to win you as a customer and is therefore accommodating to you. It is so easy and quick to combine your current loans and collect them in a new larger loan with a bank.
What does debt restructuring or collective loan mean?
A debt rescheduling is simply a new loan that you take out with another provider. This process is also called redeeming credit. A collective loan becomes when you combine several of your loans and instead of having different loan providers, place all of them in one credit institution. This is worth it if the interest on the new loan is cheaper. If you are a savings fan, you should regularly use our comparison calculator and check whether you are now getting a lower interest rate for your installment loan.
At many banks, you can choose “debt rescheduling” or “loan repayment”. Then indicate how much money you still owe the old loan provider, plus what you may need for the future and how many months you have to repay the amount. Note that if you have multiple loans, you have to add up the sum. This is how you combine all your loans into one, the so-called collective loan. The interest rate on the new loan must be lower than that on your old loan. You can quickly save a few hundred euros and have a cheap long-term loan.
Normally, you change the credit institution when rescheduling. Sometimes the old loan provider is also interested in keeping you as a customer. Show him the new offer and negotiate. If you are lucky, you will get a cheaper interest rate than you had before and can stay with the company yourself.
A debt rescheduling makes sense even if you regularly use the expensive overdraft facility in your checking account. In the event of short-term financial bottlenecks, your house bank will help you in most cases by granting an overdraft facility for your checking account. The interest rates for overdrafts are up to 13%! With a loan you can pay off these expensive debts, get some air and benefit from cheaper interest rates.
Don’t forget you can repay your installment loan at any time. You are legally entitled to this. However, some banks will have to pay compensation that you will have to pay.
When is a debt rescheduling worthwhile?
In principle, debt rescheduling is worthwhile for medium and long-term loans with a remaining term that is longer than a few months. However, there is one exception in which a redemption can make sense shortly before it expires: if you need further financing after paying off your loan.
Whether a debt rescheduling is worthwhile in your case depends primarily on the interest rates on your current loans. If the interest rate on a collective loan is lower than the interest rate on your existing loans, you should make a change. Depending on how big the interest rate differential is, you can save that much money. This applies particularly to the rescheduling of a overdraft facility.
Another factor in favor of debt restructuring is the number of current loans that you have to pay off in parallel. If you already have to repay several loans, your financial situation will not only become clearer, your credit rating will also improve. The more invoices and due liabilities you have at the end of the month, the more confusing the whole thing is and the risk of default increases.
There is a risk that you will lose track of your monthly payments. There are delays in payment or worse, you can no longer afford the loan because it exceeds your budget and you fall behind with the repayment. Both cases have a negative impact on your credit rating. It is easier to summarize, collect and reschedule the loans. This is how you eliminate the risk of deteriorating your credit rating. If your credit rating improves, this can also result in a better interest rate for your next loan. This way you can reduce your fixed costs quickly and easily.
The new bank will analyze your financial situation closely, make a credit rating and then adjust the monthly rate to your situation. This way you can easily repay the loan.
So even if the new interest rate may not be significantly cheaper, a loan repayment can quickly pay off.
How does it work with debt rescheduling?
It’s not as complicated as it sounds. A debt rescheduling is simply a new loan that you apply to repay your old loan earlier than contractually agreed. You will then pay back the new loan as usual in monthly installments. What makes it financially interesting is the opportunity to benefit from cheaper interest rates. If the new bank has cheaper interest rates than your old provider, you save a lot of money every month. You benefit twice, thanks to the savings from the cheaper interest rates, you can repay the loan in fewer installments and pay less interest in fewer installments. In other words, the faster you repay the loan, the less interest you pay.