Financing has rarely been as cheap as it is today. Anyone who has long taken out a loan and is still paying off should check whether a debt rescheduling pays off for them. What savings such a loan transfer brings.
The interest rate policy of the Lenders Bank has not been without consequences. The fact that banks can now refinance through the Cream Bank practically free of charge and at the same time have to pay penalty interest for parked capital has boosted lending and has led to a downward interest rate slide in favor of all borrowers.
Lenders Bank interest rate policy drives down loan interest rates
A look at the interest rate statistics of the Fine Bank shows: In 2011 – the year in which the Lenders Bank last raised its key interest rates – the average effective annual interest rate for all newly concluded consumer loans was 7.75 percent *. In comparison, the mean was 5.77 percent * a good two percentage points below last year. Loan interest rates fell by around 33 basis points on average compared to 2016 (6.10 percent).
From today’s perspective, borrowers who took out a loan years ago and have not yet fully repaid it are likely to pay more interest than they should. A rescheduling of old liabilities to a new loan can often be worthwhile for them. But what savings can you expect from it?
Reduce debt and reduce interest charges
The extent to which the repayment of an old loan with a new loan pays off depends primarily on the interest rate, more precisely on the interest rate of the old and the new loan. The cheaper the new loan is compared to the old one, the more noticeable a debt rescheduling becomes apparent. At the same time, this illustrates how important it is for borrowers not to make premature commitments when looking for a suitable debt rescheduling loan. “So it is always advisable to place the loan offers of different banks side by side,” advises the consumer portal Across Lender.
In addition to interest rates, other factors determine whether debt restructuring can be saved – including the amount of the remaining debt, the number of installments still due and, last but not least, the question of whether your bank is requesting early repayment penalty for early loan repayment. In short: The savings that a debt restructuring entails cannot be quantified. However, an example gives an idea of how much borrowers can reduce their interest burden by swapping the old loan for a new one.
Example: savings of 2,000 dollars are realistic
The comparison portal Lite Lender has set up a sample calculation in which it is based on the average of all debt rescheduling loans concluded in 2017 via its loan comparison. The result: Anyone who concluded a loan with an 84-month term in 2016 at an interest rate of 7.10 percent *, which was usual at the time for the term, and a year later via the comparison portal a remaining loan amount of 22,000 dollars on a loan with 72 -month maturity and an interest rate of 4.11 percent effectively rescheduled annually, which was able to reduce its interest costs in total by more than 2,000 dollars.