Rescheduling of several loans

 

By far, most transfer credits serve to reschedule several loans. This is also true in cases where customers actually replace only a single installment loan with the new loan, as they usually also offset the discretionary credit and any credit card accounts that may be charged with partial payments.

Do all loans have to be rescheduled?

If the borrower has more than one current installment loan, the simultaneous rescheduling of multiple loans is often a claim of the partner bank chosen for the rescheduling. Most banks require the replacement of all existing loans by the new loan. Exceptions are mainly only for old loans, which are associated with particularly favorable interest rates. This applies to vehicle financing, Intrasavings Bank promotional loans and dealer financing. Of course, loans not registered in the private credit, such as the Federal financial aid loan component, can be left out of account with every rescheduling.

If the bank requests the inclusion of the disposition credit and the credit card accounts when rescheduling several loans, it requests a confirmation of the balance or a current bank statement from the borrower. Even if the bank reschedules at the client’s request without clearing the checking account and credit card accounts, borrowers should include these high-interest-rate loans in the repayment.

If consumers explicitly only want to reschedule multiple loans, but not all of their existing loans, the number of potential new loan contractors will be reduced. In this case, only the financial institutions are eligible as new lenders, which do not insist on the rescheduling of all existing loans.

The processing of the debt restructuring

When rescheduling multiple loans, the money does not go into the borrower’s account. Instead, the new credit bank transfers the amount required to be repaid to each individual current credit account. By doing so, the bank ensures that its client actually reposts existing loans and does not increase its debt with the entire amount.

The partial increase of the total loan is of course possible in the context of a rescheduling. Of course, the bank transfers the portion serving the credit extension to the giro account of the debtor as well as the amount intended for the settlement of the disposition credit. This also applies sometimes to the current negative balance on the credit card account, as not all issuers allow incoming payments from third parties.

What do borrowers look for when rescheduling?

The goal of rescheduling multiple loans is to pay less interest in the future. In calculating the potential cost savings, credit customers also take into account, in addition to the lower interest rate of the new loan, the amount of prepayment interest that may be payable. No prepayment penalty will be payable if the existing installment loan agreements provide for the right to additional additional payments free of charge. Likewise, the settlement of overdraft facilities such as the discretionary credit, the debit balance of a credit card account and a disposition credit at any time without calculation of special interest is possible.

Another possible reason for the rescheduling of several loans is the possibility of reducing the monthly installments compared to the current obligations by extending the term. Contrary to the advertising of some banks specializing in debt restructuring loans, the reduction of creditors without saving interest or reducing the monthly installment alone is not a major benefit for the consumer. Finally, the bank collects the due credit installments so that the borrower does not have to pay by settling them arises. Important for each rescheduling of multiple installment loans and the disposition credit is a sufficiently long term to actually pay the resulting installments from the current income.

The settlement of the credit installments with the help of the giro account is possible after a rescheduling, but does not make sense. This approach will soon require another installment loan to rebalance the account if the bank customer does not want to pay long-term interest on the account. Ideally, the new loan used to reschedule several loans is not only associated with low interest rates, but also with the flexibility of the repayment agreement. It is desirable that the borrower not only be able to make special repayments at any time and without any amount of restrictions, but may also suspend them once a year at a rate.

If a flexible loan offer for rescheduling is associated with slightly higher APRs than the cheapest but rigid offer, this is often more favorable overall for credit customers. The loan comparison reveals various offers from banks for a rescheduling of several loans, which reduce their interest rate for consumer loans when replacing existing loans. Such special loans for rescheduling are attractive.

However, it is quite possible that the credit comparison indicates even cheaper loans from other financial institutions without earmarking. In addition, the reduced interest rate on a special loan for the rescheduling of several existing loans is in part only applicable if the borrower refuses to extend the loan, with the exception of rounding up to the next straight thousand.

About: Cary Luby


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