When is it worth rescheduling?
Whether a rescheduling is worthwhile depends on several factors: For example, the amount of the remaining debt, the term and the interest rate that you pay for the current loan. The higher the remaining debt and the term, the greater the savings potential. If you combine several loans, it is easier to keep track of the term, interest and repayment installments. But even a single loan agreement concluded years ago, for example for the house or car, can have long since become too expensive due to the old conditions.
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What should I consider before rescheduling?
A loan is not just made up of the interest rate. Right now banks cannot earn that much from interest alone. So they look for other ways to get their customers’ money
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Banks and credit intermediaries offer rescheduling and consolidation of old loans. The customer is promised to get rid of the expensive overdraft facility or to design the old installment loan with much lower interest rates. They are also offered more financial flexibility and a credit line. With such a credit line you can withdraw a certain amount of money whenever you need it and repay it according to your own needs. Supposed advantage: You pay back part of the loan and borrow money again. That sounds like financial freedom, but for many it is the entry into permanent indebtedness or over-indebtedness.
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- Prepayment penalty
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When banks grant loans, they plan the expected interest rates firmly in their sales. The banks are consequently not interested in early repayment of the loan. In order to avoid this, almost all loan agreements contain a so-called early repayment penalty. This replaces the bank’s default interest, should you redeem the loan before the end of the term.
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Warning: It depends on when the old loan was taken out. The magic date is June 10, 2010. If the loan has been completed beforehand, there is no statutory upper limit for the early repayment penalty. So that can get really expensive. If the loan was taken out after June 10, 2010, the bank can add a maximum of 1% to your remaining loan amount as compensation.
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It’s a milkmaid bill: if a loan costs up to now, for example, € 300 a month and then only € 100 through debt rescheduling, this can only work with the best interest rates if the loan runs much longer. And that’s exactly where the catch is. Banks lure their customers with the alleged monthly savings, but keep them for many years longer.
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All banks, but also especially private credit intermediaries, strike at the brokerage or approval of loans with proper processing fees. You should definitely take this into account when calculating the rescheduling. Especially with smaller loans, the fees can quickly cancel out the savings.
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What should I do if I want to reschedule my loans?
Anyone who has credit problems should seek independent advice. A suitable contact person is the consumer advice center. The financial service advisors there are also the right people to contact if you just want to check whether debt rescheduling is beneficial at all. You can also find out more on your own: First of all, you should check the loan agreement for the current remaining debt and whether a prepayment penalty has been agreed. A new loan offer can be found on corresponding comparison portals on the net. If the change is worthwhile, you can first ask your bank whether they can offer better conditions for the current contract. If not, you can sign the new loan agreement and use it to repay the old loan early.
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