A debt rescheduling can be worthwhile if the interest on the new loan is significantly lower than on the current loan. Rescheduling an installment loan also makes sense if the financial situation has changed and the monthly charge is too high. However, a sufficient sense of proportion should always be kept.
The interest savings should be calculated in advance and compared with the cost of taking out a new loan. This usually only pays off if the interest on the new loan is significantly lower than it was for existing loans. Borrowers must not forget that the processing fees already paid and included in the installments, which can amount to up to 3 percent of the net loan, are not reimbursed. If the remaining term for the existing loan is only relatively short, debt restructuring is usually not efficient.
The same applies to all credit contracts that have been concluded with a residual debt insurance.
Debt the installment loan to gain financial leeway
It is not uncommon for installment loans to be taken up spontaneously, so that over time three, four or five loans run in parallel, all of which are debited at different times. If you want to get your personal finances tidy, maybe the monthly charge should be stretched at the same time, you can look directly for a debt rescheduling loan that some banks offer extra.
In most cases, the debt restructuring service is then taken over by the bank, so that the borrower has nothing to do with the discharge of the obligations. In such cases, there is usually no loan disbursement. The new loan will only be used to repay existing liabilities.
New consumer credit directive effective June 11, 2010
New law applies to all credit agreements that are concluded after June 11th, 2010. Consumers are now entitled to redeem their loans early at any time, but at the same time the banks can charge a prepayment penalty that may not exceed one percent of the repayment amount.