Guide: rescheduling a loan - when is it worth it?

Reschedule credit

Important advantages for the borrower:

  • Combine existing loans into one loan
  • Financial relief through lower monthly installments
  • Use of the current low interest rate
  • Better overview of monthly liabilities
  • Co-financing of new requirements easily possible

In the current phase of low interest rates, borrowers should take a close look at their existing loan liabilities. Many borrowers pay too high rates. If the loan was taken out several years ago at a significantly higher interest rate and / or if several loans were drawn down from different creditors at the same time, a loan rescheduling can often save a considerable amount of money. The interest rate level in Germany is currently historically low, so that rescheduling one or more loans is worthwhile in most cases.

Whether consumer credit, credit card or overdraft facility - when rescheduling all existing loans can be combined into one loan. The borrower benefits from many advantages. First of all, rescheduling provides a better overview of current liabilities. Because instead of paying several loan installments to different creditors on different terms, the borrower only has to pay one monthly installment. In addition, the borrower benefits from a cheaper interest rate and can thus lower his loan rate. The rescheduling loan can be designed very flexibly according to the wishes of the borrower. An extension of the term leads to a further rate reduction. If, on the other hand, the borrower wants to be debt-free faster, he can leave the monthly rate at the same level as before, but increase the repayment portion due to the lower interest burden. Of course, the borrower can also co-finance new needs at the low interest rate in the course of the debt rescheduling.

Anyone planning to reschedule should compare different providers in advance. The annual percentage rate should always be decisive for the comparison. Since the consumer credit directive came into force in June 2010, lenders have always had to state the APR, which at least two thirds of all customers actually receive. This simplifies the comparison for loan seekers significantly. In the installment or consumer credit area, the comparison is therefore relatively easy to carry out. The framework conditions for loan rescheduling are also clearly defined. With the introduction of the Consumer Credit Directive, it was regulated by law that banks are only allowed to charge a prepayment penalty of up to one percent of the remaining debt for loans taken out after June 11, 2010.

For the early rescheduling of real estate loans, we generally recommend an individual examination by experts, as many factors must be examined individually in this credit area. Our technical advisors will be happy to help you with this.

Under what circumstances the loan is worth rescheduling

When a cheap rescheduling loan is found, borrowers should work out how much they can actually save with rescheduling before tackling it. Practical rescheduling calculators help to determine the exact savings potential. If the old loan was taken out before June 11, 2010, the loan agreement should be checked for the amount of the early repayment penalty. Debt rescheduling only makes sense if the costs of the rescheduling loan, taking into account the early repayment penalty, are significantly below the costs of the old loan. The advantages of a loan rescheduling must therefore always be weighed against any disadvantages.

As a basic rule, the higher the remaining debt, the longer the old loan is still running and the higher the difference between the old and new interest rate, the more it pays off for you to reschedule.

Debt rescheduling is recommended in the following situations:

  • They need financial flexibility and have to significantly reduce their monthly burdens. A cheap rescheduling loan has various effects that have a positive effect on the monthly burden: The interest burden is generally lower due to the low interest rate level. If the rescheduling loan is taken out in the amount of the remaining debt (plus the prepayment penalty, if applicable), which is well below the original loan amount, the borrower usually receives a better interest rate due to the lower risk for the bank. On the other hand, borrowers can redefine all parameters of the rescheduling loan. With a longer term, for example, the monthly rate can be significantly reduced again. This means that the borrower has a lower total monthly burden and more money is available again.
  • You still need to borrow money, but don't want to take out another loan. Especially if the borrower already has to make several monthly installments from different creditors, he should not take out an additional loan from another lender. It is better to combine all residual debts of the existing liabilities into one overall loan and at the same time to co-finance the new requirements. Despite the addition of an additional sum, the total burden drops drastically by combining all liabilities.
  • Your account is already debited monthly with numerous monthly installments from various financings and you slowly lose track of things. A rescheduling loan provides financial relief and thus more order in your finances. With the rescheduling, all liabilities can be redeemed and combined into a monthly rate. It (almost) does not matter which type of loan it is. You can replace the overdraft facility, various consumer loans, outstanding credit card debts, etc. with a rescheduling loan. You only have one creditor instead of several and you only have to deal with one contact person if you have any questions or problems. Credit bureaus like Schufa rate that positively. Combining your loans into a rescheduling loan also improves your Schufa score.
  • You are permanently overdrawn on your checking account and even when you receive your salary, you can no longer get out of the red. The interest on the overdraft facility is currently just under ten percent on average. That is well above the interest rate on consumer loans. A rescheduling of the disposition to an installment loan is therefore advisable in any case.
  • You have a higher income, for example due to a raise in salary or an inheritance, and can now afford higher monthly payments. If the increased income is sufficient to completely pay off all debts, you should check whether and to what extent there is an early repayment penalty. If a full repayment is even possible free of charge, you should cancel your loan. This saves you the interest burden for the rest of the term and you are quickly free of debt again. If you cannot repay the remaining debt in one fell swoop, but still want to save interest, there are two options. Either you reduce the remaining debt and term through higher special repayments, provided the loan agreement allows this. Or you can simply replace the existing loan with a new loan with a shorter term. Both bring you financial advantages.

The right course of action for debt restructuring

First of all, the total credit requirement must be determined, ie the amount of all remaining debts from old loans plus any new requirements that may be required. In addition, key data such as the current interest rate and the remaining term are relevant for a debt rescheduling. All of this data is usually included in the repayment schedule of the existing loan. Before taking out a new loan, the borrower should find out what notice period must be observed and the costs associated with premature termination of the loan agreement.

In the next step, the borrower must be clear about his goals and wishes. Should the loan installment be lowered through lower interest rates and a term extension, thereby creating financial leeway? Or does the borrower want to be debt-free again faster and even shorten the term? With these considerations in mind, the borrower can search for the right loan offer. Practical online credit comparisons help to get an initial overview. Since most loans are dependent on creditworthiness, however, loan seekers cannot avoid obtaining at least two or three specific offers in writing in order to be able to compare the terms and conditions directly with one another. In addition to the loan interest, other parts of the contract such as installment breaks, special repayments or free early full repayments should also be compared.

If you don't have the time and patience to make a comprehensive loan comparison, you can also contact the experts at Best Credit . We work with all relevant banks and financing partners and, thanks to technical interfaces, can find the best offer for each of our clients at the push of a button.

If you want to replace your expensive loan with a cheap rescheduling loan, you should also state "rescheduling" as the purpose of the loan application. In this way, the new bank knows that the current loan installment is to be replaced by the new installment and that the previous creditors will no longer apply with the rescheduling.

Conclusion: reschedule loan and save money

Do you have an expensive old loan or several loans with different lenders? Then now is high time to reschedule while interest rates are still at a low. The savings potential is usually so high that rescheduling is definitely worth it. We would be happy to help you determine how much you can actually save with a rescheduling loan and find the loan that best suits your goals and ideas.

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