Although lending rates have been at a low level for years, there are still loans with comparatively high interest rates. Especially real estate and other installment loans with very long terms can be affected. The good news is, you don’t have to live with these high rates – by rescheduling a loan, you can secure cheaper rates. And other conditions can also be renegotiated. Repaying an old loan is not the only reason for debt restructuring.
When does it make sense to reschedule a loan?
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In most cases, rescheduling is mainly about saving costs – that is, getting cheaper interest rates. As a rule of thumb, the loan is worth rescheduling if the total cost of the new loan is lower than the remaining debt plus interest and early repayment penalties.
On the one hand, it is possible to save by replacing an old loan with a new one. If you have several loans running at the same time, there is also potential for savings: Instead of paying interest for each individual loan, you combine the loans and only pay interest once. This is often not only cheaper, but also much easier to keep an eye on.
But there are other reasons for rescheduling: Take the opportunity to top up the loan amount – simply increase the remaining debt you actually need by the additional amount you need. In addition, other conditions can also be renegotiated, for example the term or the rate of installments. If you have more or less money available for repayment in the longer term, this can be taken into account when rescheduling the loan.
It can be particularly worthwhile to reschedule a loan with residual debt insurance: This insurance is relatively expensive, only makes sense to a limited extent and is difficult to terminate for an ongoing loan. With a rescheduling, however, you get out of the residual debt insurance and at least save the outstanding installments for the policy.
When it is not worth rescheduling
If a loan only runs for a few months or if the remaining debt is less than 1,000 euros, it usually does not make sense or it is possible to reschedule a loan. Many banks require a minimum term and / or a minimum loan amount. And even if you find a suitable loan offer, the savings potential with such small sums is usually correspondingly low. If you still want to reschedule or get rid of the loan, there are the following alternatives:
- Pay back the loan in full. Before doing this, however, calculate whether the remaining debt plus any prepayment penalty is lower than the sum of all monthly payments. Only then is the early replacement worthwhile.
- Choose a longer term and / or a higher loan amount to meet the minimum requirements.
- Replace the old loan with a credit line. This works in a similar way to the overdraft facility on your current account, but it is cheaper – but still more expensive than most installment loans.
Rescheduling a loan: Note the prepayment penalty
An important cost item, which we have already mentioned several times in the previous paragraphs, is the prepayment penalty. This one-off payment becomes due if the bank misses interest due to the early loan repayment. The amount of this compensation depends on the type of loan:
- For installment loans with a remaining term of more than one year, the prepayment penalty may amount to a maximum of one percent of the remaining debt. For a shorter term, a maximum of 0.5 percent.
- There is no upper limit for mortgage lending, but compensation can only be claimed within the first ten years after completion. You can then reschedule your loan with a period of six months without having to pay any compensation.
- Solve loans without fixed interest rates, like Overdrafts or credit lines, from, no extra charges at all are allowed.
Rescheduling a loan: use the comparison calculator
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For the actual comparison, you only have to enter the required amount, the desired term and the purpose of “debt rescheduling”. The latter is important so that it is clear to the new lender that it is a debt restructuring and not a new loan. This has a positive effect on the later credit check.
After entering the data, you will receive various non-binding loan offers at a glance. When making a comparison, the effective interest rate is particularly important, but other conditions can also be interesting.
Get a new loan and reschedule old ones
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If you are interested in an offer, you have to provide further information about yourself and submit various documents – especially salary and other evidence of your creditworthiness. With many providers, the submission is completely digital, so that the processing time is greatly reduced. At some banks, submission and subsequent communication were made by traditional post.
Tip: To speed up the loan rescheduling, request a transfer certificate from your old bank. This provides information about your current loan obligations and is sometimes required by the new bank in order to be able to pay off the new loan. Although the new and old banks can also exchange this information independently, you usually speed up the process if you take care of the certification yourself.
Questions and answers about debt rescheduling
Can you reschedule a loan at the same bank?
In principle, it is possible to take out a debt rescheduling loan with the same bank with which the previous loan is running. But it is only worthwhile if the offer for the new loan is cheaper than your previous loan and all other offers that you can find via a loan comparison.
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How fast does a debt rescheduling work?
How long it takes to reschedule a loan depends, on the one hand, on whether or on you submit all of the required documents in full and correctly. In addition, it depends on the type of processing: If you choose a bank that still relies on the postal dispatch of all documents, it takes significantly longer than if you choose a provider where the application, checking and processing is completely digital. It can take a few days or several weeks for a loan to be rescheduled.
Please note: an offer for a debt rescheduling is usually limited to the moment of the next installment payment – after that the remaining debt changes and thus also the offer. It is best to initiate a debt rescheduling shortly after you have made an installment payment.
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What do you need for a debt rescheduling?
- Current loan agreement or all contracts that are to be rescheduled
- Loan account statement to prove the current remaining debt
- Salary statements and / or other evidence of your financial situation, such as bank statements
- Identity card
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Can I change the monthly loan installment during the term?
Many banks allow their customers to adjust the agreed rate up or down within the contract period. However, sometimes this comes with additional fees. If you want to have the freedom to adjust the installments free of charge at any time, pay attention to the appropriate conditions when comparing loans. Debt rescheduling can be worthwhile for contracts that have already been concluded and do not provide for free adjustments.
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Debt rescheduling is almost always worthwhile
A basic note at the end: Even if the overdraft facility is a supposedly convenient way of getting a small loan quickly, it is also an extremely expensive one. The credit line is a little cheaper. However, due to the high interest rates, both options are not suitable for longer periods of time or for larger purchases. You should therefore use the opportunity to reschedule an overdraft facility or credit line at any time – there are neither notice periods nor prepayment penalties to take into account.
