Since the savings are spread over the entire repayment period, the monthly fee in this example calculation is reduced by just € 9. To lighten their monthly family budget even more, consumers can take out the debt restructuring loan with a longer term. Those who grant two more years to repay the loan reduce their monthly payment by 109 euros compared to the original loan.
To incorporate
Long periods increase overall costs
The longer repayment period has a disadvantage: the more time consumers give to repay their loans, the more time they have to pay interest. This increases the overall costs. Despite the lower interest rate, consumers would pay a total of € 520 more to repay the new seven-year loan than the old loan with a shorter residual maturity.
“For people who want to lighten their family budget quickly and effectively in the current situation, debt restructuring with a term extension can still be a sensible option,” says Oliver Maier, CEO of Verivox. “By extending the repayment period, they pay a lower rate and therefore have financial leeway for other expenses.”
As soon as the financial situation improves and the money saved is not completely needed, borrowers can use it for special repayments in order to get rid of debt faster and avoid unnecessary interest costs.
In order for there to be no additional costs for such special repayments later on, those interested in credit should pay attention to flexible repayment options when looking for a suitable renegotiation loan. “For many banks, free special repayments of any amount are already standard today without the interest rate worsening,” says Maier.
Savings despite early repayment penalties
In its calculation model, Verivox did not take into account any compensation for the early repayment of the loan. Whether a so-called prepayment penalty is due in individual cases depends on the provisions of the loan agreement. Unless otherwise agreed, the old bank may claim compensation for the loss of interest, but not more than 1% of the remaining balance.
Due to the lower interest rate, the debt restructuring would still be worth in this case: with a debt restructuring loan with the same duration, the total costs would still be 311 euros lower than the old loan.
