Many people who want to reschedule an old installment loan or combine several loans into a single loan ask themselves which loan could be their best loan for a debt rescheduling. It is not an easy question to answer. For this reason, it would be urgent to carry out a settlement before the planned debt restructuring.
Looking for the best loan for a debt restructuring
A debt rescheduling is only worthwhile if the interest level for the new loan is significantly lower than the interest level that was still valid for the old loan. In addition, care should be taken to ensure that any premature loan repayment does not result in any fees that would nullify the interest savings.
In principle, not only an installment or consumer loan, but also an overdraft facility can be rescheduled. In practice, this variant is even very often practiced.
This would be particularly worthwhile if the account has been in the red for a long time and there is no realistic prospect of bringing the negative balance back to zero. In addition, the interest on an installment loan is significantly lower than that on an overdraft facility.
Application and approval
Debt restructuring can only be carried out if the customer has a certain minimum level of creditworthiness. To do this, the Credit Bureau information would have to be in order and the income high enough. If neither of these two conditions is met, it will usually be very difficult, if not impossible, to find a suitable loan for debt restructuring. When rescheduling a debt, it should also be borne in mind that the new loan replaces one or more old loans and is not taken up in addition.
In the latter case, the requirements for personal creditworthiness would be significantly higher than for debt restructuring. If all the requirements are met, the loan is paid out very quickly. It is expressly earmarked and may only be used for debt restructuring.
Best loan for debt restructuring – repayment
Every loan must be repaid properly and on time. Further details are regulated in the loan agreement. In the case of an installment loan, this means in concrete terms that a fixed monthly repayment installment is payable throughout the term. Each bank offers different options regarding the amount of the installment and the term.
Those who prefer low rates should choose a longer term. On the other hand, he should be aware that a long term is always associated with high interest rates. Anyone interested in a quick repayment of the loan should therefore check carefully whether they can increase the monthly installments. This could shorten the term and keep the interest rate low.