Redirect credit – save while lowering interest rates

If you need to repay a loan and save money and cut interest rates, rescheduling has some benefits for you. Good reasons for the repayment of loans are the optimization of your credit rating, a clear overview of your current financial position and a low interest burden.

Debt credit: That’s how it works

You can then finance a loan if you have one or more installment loans. Debt rescheduling (also called loan repayment or rescheduling loan) means that you arrange for a change of your current loan into a new loan agreement. In the case of multiple installment loans, you can combine all your current loans into a single loan.

In principle, a loan repayment makes sense if the residual debt of your existing contracts is high and the new interest rate is well below the old interest rate.

These loans can be reposted

Disbursement credit: If you often use your credit facility and plan to do so in the future, very high interest rates will apply. For many banks, the disbursement costs are even monthly. Should it therefore not be possible for you to clear your overdrawn current account within a few months, it is advisable to have your credit line re-accounted. Often, repaying loans can significantly reduce your interest cost. Because MRP interest is not only a high, but also an unnecessary and basically avoidable financial burden.

Your advantage: the replacement is very easy. You simply transfer the loan amount to the account. So you balance the negative balance and thus further interest is not incurred. In addition, you do not have to settle any prepayment penalty or you must meet a notice period to have your debt restructured.

Mortgage lending: When it comes to financing your own home, the debt has a special function in this case. Because this is rarely about the premature repayment of your loan. Rather, the focus here is that you can continue to complete your mortgage lending after the interest rate has been fixed. Due to the initially high residual debt amounts and an equally long term, it is therefore advantageous to recapitalize the loan. So you can continue your financing at a lower and therefore cheaper interest rate.

Installment Loan: With a installment loan, saving is in the foreground. In the past, if you have a low-end loan, a classic installment loan can help you make big use of interest rates as you reschedule.

Be sure to check your current interest rate. Even if your interest rate was attractive at the time, it is possible that lending rates have dropped significantly in recent times. Therefore, in the long run it is a sensible option to summarize your installment loans. This way you not only save money, but also get a better overview of your existing loans.

Your advantage: The prepayment penalty you pay is not too high and in some cases additional costs may even be completely eliminated.

Reposting several loans

Do you have several or all of the credits listed above? In that case, a shared repayment of your entire loan can be an advantage in your case. If you have slipped into your payments with your payments and have thus overdrawn your current account, you want to pay off an investment and also have to pay a installment loan, then check exactly your options.

It is particularly important to calculate all interest costs and also to take into account any fees that may be incurred. Now compare these total costs with the potential debt rescheduling loan and compare whether rescheduling is worthwhile in this case. You should also adjust the amount of installments to your new loan. On the one hand, you can agree on an amount that is affordable for you, and on the other, you can set the installment amount so that the payment does not take too long.

When is a rescheduling useful?

Converting a loan can be quite worthwhile – you have the advantage of a better credit rating, a long-term high cost savings and a good overview of all your installments. Whether it makes sense in your particular case to have your loan financed depends on several factors.

First, find out what the current interest rates on installment loans are. This information is essential in a rescheduling and should therefore not be underestimated.

If the current interest rates are cheaper than the interest rate on your existing loan, rescheduling is definitely a great advantage. It always depends on the difference in interest rates – depending on the amount of interest you can save a lot of money. Reposting is particularly useful if you want to replace an outgoing loan.

If you pay off different loans in parallel, it can also be of great help to you if you finance your loan. Even though the level of current interest rates is not more cost effective than the interest on your existing loans, you should still consider rescheduling. Because you also improve your credit rating by combining your loans.

If you pay off multiple credits at once, you lose track quickly. This in turn can lead to payment delays. Or you get the problem that you can no longer finance the loans because the total exceeds your budget.

In both cases, it is a major impairment of your credit rating. The amount of monthly installments will be adjusted to your needs by your bank, where you will have the debt repaid. So nothing stands in the way of a problem-free payment of your loan. Likewise, improving your credit rating has the benefit of giving your new loan a lucrative interest rate and thus saving you money.

Checklist for the repayment of loans

1. Checking your current loans: First, you should consider which financing models you can use to repay a loan. After that, your costs will be determined – the effective annual interest rates and the total costs will have to be checked for a comparison of your situation.

2. The condition comparison with the loan calculator: Afterwards you can carry out a credit comparison with the help of the loan calculator. It tells you which bank offers the loan that best suits your individual needs. It is important that the loan amount covers all residual debt and any financial charges. Then decide on the right term, in which the amount of the installment does not overburden your financial situation.

3. Comparison of the total cost of existing loans and debt restructuring costs: have you identified a suitable loan? Now you only have to calculate the total costs. You can compare these with the total costs from step 1. In this comparison, you can see whether you are actually saving money and whether it makes sense to have your loan financed.

4. Weigh the pros and cons: At this point, a consideration makes sense: Is a debt actually worth it? You should keep a clear eye on all the pros and cons and skip your financial savings and the possible burden of debt restructuring.

What you need to consider when reposting the loan

The following aspects are especially important if you want to repay a loan:

  • Find out your exact residual debt.
  • Decide on the appropriate monthly installment and adjust the rates according to your financial situation.
  • Compare your options with personal offers and make a non-binding cost inquiry.
  • Get an overview of your savings.
  • Pay attention to a correct application – state “rescheduling” for the purpose.
  • If you combine multiple loans, determine in advance whether a combination of different loans can be implemented with the provider you require.
  • Keep an eye on the notice periods for early repayment.
  • Settle the balance on time if it is not repaid by the new lender.

Credit without credit check – is this possible?

There is a distinction between a credit without a credit check and one with a limited credit rating. A loan without a credit check means that the creditworthiness of the person seeking a loan is in no way assessed prior to the granting of the loan.

The lender thus has no insight into the income and assets of the borrower, which are usually important basis for decision making before entering into the credit relationship, because they guarantee a certain degree of security. In the same way, the lender retains past payment difficulties, any over-indebtedness and / or insolvency of the contracting party.

A loan without a credit check therefore leaves the lender unclear whether or to what extent the borrower will be able to settle his borrowings in accordance with the contract. From the point of view of the lender, therefore, credit without a credit check represents a major factor of uncertainty and a high default risk.

Money lending in the family and friends circle

It is unlikely that a rational investor will be prepared to take that risk by granting credit to a third party borrower without a credit check. The likelihood of loss seems too high compared to the opportunity to generate attractive returns on this investment. Therefore, a credit without a credit check is limited to the family and acquaintances of the potential borrower.

Due to the close personal relationship and the often already long-lasting kinship or friendship relationship, the assessment of the creditworthiness of the borrower fades into the background. A credit without a credit check is possible in a personal environment, because there is usually the necessary confidence in the good behavior of the borrower. In addition, the social component is added. This promotes the willingness of the private lender, his family member or good friend to help with a credit without credit check in the financial distress.

Personal loans and loans without credit bureau

An advertised credit without a credit check, there is a risk that it is a dubious offer. A complete abandonment of any kind of credit rating by the lender is unlikely and questionable. However, there is a realistic chance of getting a reputable credit with limited credit rating.

This group includes personal loans and non-credit bureau loans, which, in contrast to loans without a credit check, still rates the creditworthiness of a personal loan, albeit in a mitigated manner. Although private investors usually refrain from obtaining a credit rating from the German credit agency credit bureau. As a rule, however, they insist on evidence of the income situation of the borrower in order to be able to classify the solvency of the debtor. Such loan projects between individuals can be put into action through specialized personal loan portals or advertising markets.

The situation is similar for loans without credit bureau. In this case, the request for credit bureau information is omitted. As a condition for granting the sum of money, however, a regulated income is required, which must be proven by appropriate salary statements. Collateral or guarantor may be agreed as compensation for the bad creditworthiness of the debtor. The simplified and uncomplicated processing of loans without credit bureau can be expressed in higher interest rates.

Conclusion in terms of credit without credit check

Thus, neither a loan without credit bureau nor a personal loan concluded between third party creditors is creditworthiness. These two forms of credit are not entirely creditworthy, but allow a contract to be made after the borrower has a limited credit check. Borrowing from family members and acquaintances is the only real way to get credit without a credit check.