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Car title loans

Car title loans online -How to get a car title loan?

How to get a car title loan?

If you are looking for a car title loan, you can get it from https://compariloan.com/Car-title-loans/.

A good option in this regard would include a loan with a vehicle as collateral. This doesn’t only work if you buy a car and take out a car loan. A vehicle can also be used as collateral for other loans. Depending on the value of the vehicle and how high the bank classifies the vehicle as a security. Because if it is not a car loan, the vehicle must have a certain value so that the bank can make good use of it in the event of payment defaults.

The best-known loan with the vehicle as security is the car loan. If you accept this, the bank or the dealership – depending on where you take out the loan – will consider the financed vehicle as security. You should always allow this, otherwise, you may be denied the credit.

If the vehicle is accepted as security, you must deposit the vehicle registration document with the bank or the dealership. It is considered a deposit and will only be given to you when you have completely paid your debt. In this way, the financier can be sure that he will not have to laboriously pledge the car in the event of payment default and that you will not simply sell the vehicle. Without a vehicle registration, this is not possible.

The loan with the vehicle as security with other forms of credit

But not only the car loan works as a loan with a vehicle as security. You can also offer a high-quality vehicle as security with other forms of credit. Regardless of whether it is an installment loan, a real estate loan or a consumer loan – if the loan amount is higher and your credit rating is not sufficient, a new or very well-preserved older vehicle can be offered as security.

It is always important that the vehicle does not lose too much value during the loan period. A classic car that hardly loses value and tends to increase it is therefore often taken as security. However, the borrower must be able to prove what the value is. Otherwise, the bank may first issue an expert opinion. However, this is lengthy, costs money and is therefore only sought in very rare cases.

What other guarantees have to be provided?

A vehicle represents possible security for a loan. But there are also many other security aspects that must be fulfilled when taking out a loan. So you will not get a loan from a bank based in Germany if you do not have a proper Credit Bureau. Negative entries are therefore a thing of the past and can only be compensated for with the help of a second borrower.

A steady and reasonably high income is also essential for borrowing. It ensures that the loan can also be paid in the end. In addition, there is a permanent residence in Germany, a minimum age of 18 and identification documents that identify you as a borrower. On top of that, you have to agree to a query from Credit Bureau and be able to prove your income as well as your monthly expenses with the help of income receipts and bank statements.

All of this and the additional collateral, such as a vehicle, then result in the creditworthiness required to be able to take out a loan on fair terms.

Get a loan from a bank

Good Credit Bank is a bank that, not surprisingly, is run by Good Credit. Good Credit is known for its grocery stores that are found throughout Sweden but few know that they also run something called Good Credit, a bank that suits almost everyone but mainly you who often shop at just Good Credit.

Why choose a Good Credit bank?

Why choose a Good Credit bank?

There are many reasons why you should consider choosing Good Credit Bank the next time you switch banks. First, you can save in funds and take out loans, which is always nice when a bank offers. Another reason is that Good Creditbanken offers several digital services, which allows you to easily carry out different banks via mobile.

With a card from the Good Credit bank you can use blip in all the stores and you get the opportunity for a double bonus on all your purchases at a Good Credit store. However, this only applies if you save, borrow or insure at the very Good Creditbanken.

Loans from the Good Creditbank?

Loans from the Good Creditbank?

Can you borrow from the Good Creditbank? The answer to that question is actually yes, the Good Creditbank offers both loans and loan pledges. For example, you can take out a Good Credit bank mortgage loan, a larger loan for those who want to buy a new home. They also offer car loans, boat loans and regular bank loans, ie unsecured loans.

The Good Creditbanken are actually quite unique when it comes to their bank loans, they offer unsecured loans of up to SEK 500,000, a very large sum that you can spend on exactly what you want. However, keep in mind that you have to repay the entire loan and with interest you can make this expensive.

Good Credit bank loan protection

Good Credit bank loan protection

Good Creditbanken actually has insurance for its loans, which is really good. Their usual loan protection deletes the entire debt if the person who took the loan should die. This thus protects the estate.

Their loan protection plus, on the other hand, is really good. It protects you if you suddenly become unemployed, involuntary. You will then receive compensation of up to 20,000 per month for up to 12 months to help you with your installments. In order to take out this loan protection, you must have employment of at least 22 hours a week and you must be both registered and resident in Sweden. Also, when signing these protections, you must not be older than 61.

These insurance policies are extremely good because you are protected in case something happens to you so you do not go into personal bankruptcy. The Good Creditbank is actually unique in offering this form of protection, yet another reason to choose the Good Creditbank when you change bank next time.

Good Creditbanken interest rate

For all its loans, Good Creditbank charges a special interest rate, just as all other banks do. This interest rate varies depending on the loan you have and the size of that loan. However, the right is not unreasonable in any way and is actually quite good when compared to other major banks in Sweden. Therefore, do not hesitate to take a loan from the Good Creditbank, with nice interest rates and loan protection that you can take out, everything will be fine.

5 Rules for New Car Financing – Car loan

5 golden rules for new car financing

5 golden rules for new car financing

If you decide to buy a new car, you usually have to pay for it by financing. New car financing is offered by different agencies. They are available, for example, from the traditional branch banks, but also from the direct banks.

In addition, most dealers work with a financing partner, with whom the financing can be concluded directly with the vehicle purchase. To ensure that new vehicle financing remains manageable, some rules should be taken into account at the end of the contract.

Many banks are currently offering cheap loans with a term of three years. Interest rates of less than three percent are on offerings from Best Bank and Cream bank. Even if interest rates are not exactly a risk, there are many sources of error when financing a new car. Basically, there are considerable differences between the car loans offered.

For example, it is always important to pay attention to your own income. In addition, the other conditions that arise in addition to the interest should be kept in mind.

Keep an eye on the household budget

Keep an eye on the household budget

When financing is concluded, your own household budget should be the number one decision-maker. So it is important to take into account which credit rate you can afford. The car will ultimately also depend on this. It is important to have solid financing that can be managed in the long term.

The possible down payment should always be checked based on the household payment. The down payment decides on the remaining loan amount. The affordable loan rate can finally be determined on the basis of the monthly surplus in the household budget. An emergency reserve must also be deducted from the general surplus.

Keep an eye on effective interest rates

Keep an eye on effective interest rates

Another important criterion is the effective interest rate. The banks basically work with differently high interest rates. In order to find really cheap financing, it is important that several loan offers are obtained.

Interest rates that are advertised in advertising are by no means sufficient. Only a concrete offer can clarify the true cost of credit. In the majority of cases, interest is calculated on the basis of creditworthiness. The decisive factor is the effective interest rate, which includes all costs and interest premiums.

Consider special auto loans

Consider special auto loans

In addition to installment loans, most banks also offer special auto loans. They are particularly recommended as the interest rates here are usually below the level of installment loans. Interest rates are particularly low when the bank demands the car as collateral.

Capital Lender and the Lite Lender, for example, work with such designs. The deposited vehicle registration document is taken as security. Once the financing has been completed, the owner of the vehicle registration certificate is handed back to the owner.

The right credit query

The right credit query

The form of the credit inquiry is also decisive. They can avoid decisive disadvantages. The bank should only report a condition query to the credit bureau. On the other hand, a credit request should not be made.

A distinction is made between the two inquiries at the credit bureau. Although this also records the conditions query, this can only be viewed by consumers. The entry is not visible to banks or savings banks. Since the condition information cannot be viewed, it does not affect other credit inquiries.

Finally check the total costs

Finally check the total costs

For every car loan, the total cost should be checked. A final comparison is crucial here. If consumers opt for the car loan from the bank, they can finally act as a cash payer at the dealer and thus negotiate one or the other discount.

In most cases, this makes the car cheaper. On the other hand, discounts are rare for dealer loans.

Special repayment on a loan

In the most common form of real estate financing, the annuity loan, special payments shorten the loan period until it is fully repaid. Due to the interest portion of the monthly installment calculated on the basis of the falling residual debt, the repayment rate increases and the real estate loan is released earlier than planned. But above all with regard to the remaining debt at the end of the fixed interest period, exhausting contractual repayment options can contribute to a significant reduction.

Furthermore, an option with high special repayments is advisable if it is foreseeable that you want to sell the property again before the end of the loan term. The loan can then be redeemed from the sales proceeds – ideally without prepayment penalty if this has been agreed in advance.

Provide loan agreement

Provide loan agreement

If it is already foreseeable when the financing is concluded that larger amounts of money will be released again and again during the term, which should contribute to the early repayment, this should be provided for in the loan agreement. Most banks offer free special repayments of up to five percent annually. Higher repayment options generally make the loan interest more expensive and should therefore be calculated meticulously and wisely. In addition, not all banks offer such flexible contract arrangements. Larger banks in particular are not dependent on this, so that rather smaller institutions are more open to individual requests.

In the case of relatively secure cash receipts, a form of credit that deviates from the annuity loan, for example a variable loan, may also be recommended. It is also possible to split the total loan into two different types of credit.

Loan repayment rate

Loan repayment rate

An option that allows the repayment rate to be changed free of charge during the term – for example from 2 to 3 percent – is a sensible alternative if, instead of larger one-off payments, an expected increase in income ensures consistently higher liquidity.

Special repayment agreements that go beyond a period of ten years do not make sense, since after ten years there is a right of termination anyway and credit institutions can only request a prepayment penalty within this time.

For building society savers – that is, if the building financing was made through a building society – special repayments are possible at any time and in any amount.

Low Income Loans | How to avail it from a bank

Although at bank I have only microcredit for private individuals. Your problem is the inclusion of low-income loans? Low-income loans raised young levée could have what kind of shadow on the grinding. Credit for self-employed with low income. Especially retirees and older people with low incomes increasingly need installment loans to finance various purchases.

A loan despite low income can be approved by the bank.

A loan despite low income can be approved by the bank.

In Germany, many consumers only have a low income. There are now many providers of financial services who provide loans despite low incomes. Loan seekers who have a good business relationship with their commercial bank can contact their credit counselor in case of financial difficulties. This is especially true when a loan is needed despite a low income.

As a rule, the banker can use the account data to call up the available loan amount. If the borrower has good Credit Bureau information and good credit despite the low income, the seller can lend. If the creditworthiness is insufficient, Astro can ask for several securities for the granting of a loan.

He is liable immediately and in solidarity until the loan is fully paid or until the house bank grants his payout. Direct credit institutions in the network are among the cheapest credit providers of all forms. Because these credit institutions provide their services exclusively via the network, they are only intended for borrowers who rely on advice and knowledge in using a computer.

Apply for a loan from a direct mortgage lender

Apply for a loan from a direct mortgage lender

But those who apply for a loan from a direct mortgage lender, despite a low income, have little chance of receiving one. Astro immediately receives information from Credit Bureau when it collects personal information, and in the case of under-revenue or if the Credit Bureau information contains negative characteristics, no positive credit decision is made. If the home or central bank rejects a loan application, borrowers can turn to a reputable credit institution on the network.

Even with these companies with low creditworthiness and slightly negative Credit Bureaumer property, a loan is generally possible despite low earnings. The credit intermediaries also offer loans without start-up costs. As a rule, these loans are granted in an amount of up to USD 3,500. Because these loans are provided by reputable banks in Switzerland or Liechtenstein, they are also referred to as Swiss loans.

If you opt for a Swiss loan, you will have to calculate with rising interest rates if you are granted one. Due to the increased risk to society, the annual percentage of exposure is relatively high. In addition, this interest includes the agency fee of the credit institution. Low-income lending, however, is only granted by these financial advisors if the loan seeker is in a permanent and above all non-terminable employment relationship.

For most credit intermediaries, a credit rating of 80 to 100 USD per calendar month is sufficient. Creditor trades on the net are a relatively new kind of financial services. In the US, the concept for these portals, which bring together borrowers and private lenders, came into being. Applying for a loan is very time-consuming. The borrower logs in with his personal information.

For the protection of the private donors will obtain a Credit Bureau information. If the arbitrator’s power of disposition does not contain any serious negative features such as reminders and enforcement measures, house arrest or private insolvency, the borrower is admitted. To know where and how their capital is needed, the borrower must set up a detailed loan project. Only when the project is fully financed, the desired loan is paid out.

Similar to the credit institutions, loans in credit markets are a bit more involved. The rise in interest rates is made up of income for private lenders and fees for the credit marketplace and the banks. For many providers of financial services, a loan is possible despite low revenues. However, borrowers must be prepared for higher interest rates.

Anyone who chooses to borrow, despite low revenues, must consider in advance whether the increased economic burden can be overcome.

Instant Loan – Cheap Loans in the Credit Comparison

Many life situations require immediate, financial action. An instant loan helps when originally planned costs explode unpredictably – for example when building your own four walls. Quickly, additional bills will be added to those already scheduled. If prices for the required materials or services are then increased, the financial cushion originally estimated as sufficient can quickly dissipate.

But it does not necessarily have to be real estate financing. The car gives up its ghost and must be repaired immediately, the washing machine fails its services or it rains through the roof without an insurance claim. There are plenty of reasons for a sudden financial crisis – but are there any solutions?

In such cases, a faster, financial compensation is necessary. By far the fastest way of lending money from a reputable financial institution is an instant loan.

How is an instant loan different from classic installment loans?

How is an instant loan different from classic installment loans?

By “immediately” we understand immediately. The fastest way to get an instant loan is through the Internet. “Immediately” at the end of the application routine, the applicant learns whether his loan is approved or not. Hence the term “instant loan”. However, this undertaking should be considered provisional since the information provided by the Bank must still be verified on the basis of supporting documents.

Apply for an instant loan

Apply for an instant loan

By means of the online form, the applicant submits all the required data to the selected bank. These are the usual details for the credit check. These include
Personal Information

  • marital status
  • household income
  • expenditure
  • Other assets
  • Other liabilities
  • employer
  • Since when busy

This impersonal approach ensures that, in most cases, the prospective lender can provide immediate information on whether a loan is approved.

After the provisional commitment

If the applicant receives a pledge after completing the online application, it will only be considered as a preliminary response and under no circumstances may lead to immediate expenses according to the motto: pay bills on credit, the loan was approved.

The credit bureau information is already collected by the bank during the application process. Previously, the applicant had to return documents such as salary and bank statements in the context of the PostIdent procedure to the bank along with the signed loan application.

However, technological progress has accelerated this process, even if not all banks are yet to access the feasible. This starts with the account statements. Some institutions offer applicants the right to legitimize them during the application process, to access their checking account once a month to analyze their disposable income and verify their salary intake. This eliminates the paper-based transmission of documents.

The electronic signature avoids the printing of the application and the mailing for the return. With the VideoIdent procedure, the applicant saves the way to the nearest post office.

These new processes allow the immediate, final commitment to be made after the preliminary loan commitment. In the case of a credit-based interest rate, the customer also immediately learns which interest ultimately reaches him. The money is in such an application process within two days on the account – an instant loan.

Repayment

Repayment

The repayment of the instant loan is different depending on the bank, but in most cases quite similar. As a rule, a fixed monthly amount is repaid to repay the loan.

“Some banks also allow annual free special repayment. For example, this can amount to ten percent of the remaining debt. Other institutions allow special repayments in the full amount of the remaining debt without charging a prepayment penalty. The legally permitted prepayment penalties for installment loans amount to one percent of the remaining debt for a residual term of more than twelve months and 0.5 percent for less than one year. “

Summary:

Summary:

All in all, instant loan is the fastest way to earn money in a serious way. Especially the way in which the application for an instant loan takes place may scare one or the other customer at first sight. The sober, factually oriented inquiry of the personal, financial situation without decisive consideration of context factors is necessary to process a loan request as quickly as possible.

Loan interest – nominal and effective annual interest

Anyone who needs money to make unplanned or costly purchases can borrow the amount required from the bank or a financial service provider as a personal loan against payment of interest. Such a loan is made up of various components.

First of all, the amount is decisive, the so-called payout amount. This is repaid in constant installments within a specified period. During this time, interest is payable, which increases the total repayment amount compared to the payment amount. The amount of the loan interest is therefore the decisive factor for the cost of a loan, but here too the following applies: Interest is not equal to interest.

Interest rate trends for personal loans

Interest rate trends for personal loans

Evaluation of the interest on consumer loans based on the annual percentage rate for the period 2003 to 2013. Percentages were used for the evaluation, which were collected on average for contracts with a variable interest rate.

Nominal interest rate

Nominal interest rate

The nominal interest rate is understood to be the pure interest on the loan without taking into account further credit costs. It is set by the bank and is roughly based on the key interest rate of the Cream Bank. This key interest rate determines the conditions under which the banks can raise money on the capital market. The lower it is, the cheaper it is for banks to obtain fresh capital, which is why they can pass on this advantage of low lending rates to their customers. As a rule, the following applies:

Low Lite Lender key interest rate = low nominal interest rate

The difference between the base rate and the nominal rate is the turnover that the bank generates. As the customer may need a loan at any time, changes to the key interest rate, especially in the event of interest rate cuts, are only passed on to customers slowly, as this can generate greater sales.

The fluctuation range of the nominal interest is between approximately 4 and 7 percent. Loan interest is always stated annually (per annum = pa) and, in the case of the nominal interest rate, also referred to as the borrowing rate or base rate.

Nominal interest rate not suitable for credit comparison

Different loan offers are very difficult to compare with one another using the nominal interest rate. This is mainly due to the fact that the cost of a loan is also determined by additional fees, surcharges and also the total term. A mere comparison of the nominal lending rates cannot provide information about the total costs.

Also with loan offers of the different banks one should always pay attention to the stated loan interest. Since the nominal interest rate is the lowest rate that can be stated, it is often used as a lure.

Effective interest rate

Effective interest rate

The annual percentage rate is much more meaningful in terms of credit costs than the nominal interest rate, because this also includes additional incidental credit costs. Since June 11, 2010, an EU consumer directive has been in force, in which the banks were obliged to list all additional costs and to indicate the effective interest rate. The purpose of the loan interest rate is to create more transparency and fairness on the credit market.

The effective interest usually includes the processing and agency fees charged by the bank.

However, account maintenance fees, special repayment costs, commitment interest or partial payment surcharges do not have to be included in the loan interest. Even though these costs generally only make up a very small proportion of the total cost of a loan and often do not even arise, special attention should be paid to this and, if in doubt, the bank should be asked directly how these costs are handled.

Residual debt insurance not included

Also not included in the effective interest rate is the optional residual debt insurance, which can always be taken out when taking out a loan. However, since the customer can also exclude them from the contract by signature, this is not taken into account in the calculation of the effective interest.

Representative of a credit comparison

In contrast to the nominal interest rate, the effective interest rate is a very good value for comparing different loan offers with one another, since the main costs are already taken into account when specifying these loan interest rates.

Sample calculation for the APR

The key data of an exemplary loan are:

  • Borrowing (payment amount) = 50,000 USD
  • Nominal interest = 5.00%
  • Effective interest = 5.90%
  • Term = 36 months

In this case, the monthly installment is $ 1,515.22 and the total loan costs (repayment amount – payment amount) amount to $ 54,547.92. The difference between the nominal interest rate and the effective interest rate is $ 690.12 and represents the fees charged by the bank.

Role of creditworthiness

Role of creditworthiness

Loan offers are usually made based on the borrower’s creditworthiness, with certain factors playing a role in lending rates. In addition to the entries in the so-called Credit Bureau file, the profession practiced and the income earned as well as the marital status are also taken into account. In practice, this means that a married teacher will most likely get better interest rates than a single young trainee.

Credit interest independent of creditworthiness

In contrast, there are loan offers in which the creditworthiness of the borrower is irrelevant. This is the case with car loans, for example, since the default risk for the loan is offset by the equivalent of the vehicle being financed. As a rule, such loans are cheaper than conventional financing.

Only for people who have a very good credit rating could it turn out to be a disadvantage to take out such a loan with non-credit interest. In such a case, it is worthwhile to complete the financing in the conventional (credit-dependent) way and to use it to pay for the item you want to purchase.

Other concrete factors influencing lending rates

Other concrete factors influencing lending rates

The most important influencing factor are the entries already mentioned in the Credit Bureau file. Entries are always made here if, for example, open invoices or dunning notices have not been paid for a longer period. However, there may also be incorrect entries in the Credit Bureau file.

Assets to secure the loan

Those who are wealthy can use these assets as security for a loan to be taken out. Tied assets in particular (real estate, funds, shares, real assets) can be used to reduce the default risk by offering the bank as collateral.

Income – household bill

In addition to pure income, which is also a factor influencing lending rates, above all the freely disposable income that remains after deducting all current expenses is gladly checked. The greater this income, the more securely the loan is viewed by the bank. This procedure is also called budgetary accounting.

Age of the borrower

The age of the borrower also plays an important role. Here, the banks consider the default risk that increases with age due to the death of the borrower and therefore prefer people between the ages of 25 and 40, which may be reflected in a lower interest rate. In rare cases, the health of the borrower can also be taken into account for the same reason, especially since a loan can also be secured with appropriate insurance.

Personal and social position of the borrower

A similar calculation is followed with the question of marital status. Here it is assumed that a married borrower, ideally with children, has a more secure job than a single borrower, since many companies have a so-called social plan if the economic situation deteriorates, which particularly protects this group of people.

In general, the risk of job loss through the bank is carefully considered. The higher the risk, the higher the loan interest on the loan. If you have a permanent contract, you will definitely get a personal loan easier and with better terms than someone with a fixed-term contract or if you are still in the trial period. The situation is even better for certain professional groups, such as civil servants. The same applies to more highly qualified people, who can usually expect better interest rates on loans, since they generally have a higher and more secure income.

Rather rare, but nevertheless possible factors influencing loan interest are the place of residence and the personal appearance of the borrower. For example, addresses in socially weak areas are initially considered to be disadvantageous and other factors necessary to compensate for this flaw. Also, no lender can exonerate themselves that personal impressions, especially in direct contact, play an important role in lending. It may also be financially worthwhile to leave a well-groomed impression with credit advice.

How to borrow USD 3,000?

USD 3000 is a relatively small sum and is therefore easy to borrow with the help of SMS loans or a fast loan. In this article, we will go through everything you need to know about borrowing USD 3000 with a quick loan or an SMS loan, even if you have one or clay payment notes.

How to borrow USD 3,000

How to borrow USD 3,000

Borrowing USD 3000 is actually very easy. The sum is so low that virtually all lenders let you borrow it. In addition, the requirements are not very high as the lender does not take a particularly high risk with the loan. To borrow 3000 you just need to find a lender and apply for a loan, more difficult than it actually is.

Can you borrow 3000 with a payment note?

Then we come to the question, you can borrow 3000 with a payment note. The answer to that question is yes! Not all lenders agree, but many let you borrow 3000 with a payment note, it’s no big problem. We’ll talk a little more about this under “Requirements to Borrow 3000”

Requirements for borrowing 3000

Requirements for borrowing 3000

There are many requirements to keep in mind when you want to borrow 3000, but most of these requirements are relatively low and simple. The first requirement is that you are not allowed to have an active debt with the chancellor. You simply cannot get a loan if you have a debt with the Crown Prosecutor. In many cases, payment remarks go well but not always.

The next requirement that we will mention is that you must be over 18 years old to be eligible for a loan. If you are not over the age of 18, it is illegal for the lenders to lend 3000 to you and therefore they fail. There is also a requirement that you must have an income with almost all lenders. The income does not have to be large, but it still has to be there.

The last requirement for borrowing USD 3,000 is quite obvious. You must be registered in Sweden, have a Swedish address and a Swedish bank account. In many cases, a Swedish social security number is also required before you get a loan. If you only meet these requirements, you should have no problem getting a sms loan 3000.

Why borrow 3000 USD?

Why borrow 3000 USD?

There are many reasons why you would like to borrow USD 3000, but there are many reasons why you might not. 3000 is not a big sum and saving money does not take very long. If you choose to save instead of borrowing, you will not have to pay interest on your loan.

The reason why you would like to borrow USD 3000 is if you need the money quickly. Your refrigerator may be broken the day before payroll. Then make sure to pay off your loan as soon as possible, otherwise it will be very expensive with interest and fees.

Now you are ready to borrow 3000 USD. We hope you learned something from this article and now know exactly how to get a loan of USD 3,000.

 

Loan Redemption – Loan or cancel early

Premature loan repayment means the termination of an existing loan agreement by mutual agreement of both contracting parties, with immediate payment of the outstanding loan debt. The loan agreement specifies whether early loan repayment is even possible. Usually, a blocking period of a few months must be observed before the loan can be repaid or canceled.

Motives for early loan repayment

Motives for early loan repayment

Since between 6 and 10% interest is generally payable on a loan, it always makes sense to only borrow money from the bank if it is absolutely necessary. Conversely, you should always try to pay off an existing loan as soon as possible. When concluding the loan agreement, this is taken into account by setting the installments and the term.

If something changes in your personal financial situation, for example due to an unexpected inheritance, the payment of an insurance or a new, better paid job, you should use this additional capital to replace the existing loan. This not only saves interest costs, but also lowers the monthly burden by eliminating the credit installments.

Another reason can be a sudden phase of low interest rates. This can especially be the case with long-term loans, such as a real estate loan. If the loan is taken out, this happens at the current interest rate level. If this drops significantly during the term of the loan, it may be worth taking out a new loan at the lower interest rate in order to replace the existing loan.

example calculation

existing loan new loan
  • Remaining credit: 10,000 USD
  • Remaining term: 36 months
  • Effective interest rate pa: 8.99%
  • Monthly rate: 316.32 USD
  • Interest costs: 1,387.52 USD
  • Credit line: 10,000 USD
  • Duration: 36 months
  • Effective interest rate pa: 5.99%
  • Monthly rate: 303.46 USD
  • Interest costs: 924.56 USD

The saving is 462.96 USD compared to the existing loan.

A similar calculation can be made if, for example, the fixed interest period for a loan has expired and the interest rate is renegotiated.

Converting loan interest from variable to fixed can also be worthwhile. Especially when the interest rate fluctuates strongly or you simply personally estimate the security of constant credit rates. However, it should be noted that the longer interest rates are fixed, the higher the interest rates.

Debt rescheduling

Debt rescheduling

Debt restructuring allows several small loans, including the expensive overdraft facility, to be combined into a new, large loan. This is particularly worthwhile if the interest rate for the new loan is lower than the interest rate for the old loan, but it also serves to make things clearer. Instead of many small installments, only a monthly installment is due, making financial planning much easier.

Revocation of the existing loan agreement

Revocation of the existing loan agreement

After the conclusion of a loan contract, the borrower can withdraw from the contract within a two-week period, ie revoke the contract. This right of withdrawal, which is applicable to all credit agreements concluded within the EU, results from the German Civil Code (BGB), in particular the chapter “Special provisions for consumer loan agreements” (§§ 491 – 505).

The revocation period begins from the time of becoming aware of the revocation instruction, which for this purpose is clearly legible on the credit agreements directly above the signature field. This means that the banks are complying with their instructions.

If the borrower can prove a lack of cancellation policy, he is legally required to withdraw from the credit contract up to six months after the loan agreement has been concluded. The loan amount paid out must then be repaid immediately.

The revocation must be made in writing and must be received by the lending bank within the period. The date of the postmark is decisive for this. An explicit reason does not have to be given, but the intention to withdraw must be clear from the document (example: “I hereby revoke the loan contract concluded with you on … with the contract number … on time.”).

Termination of an existing loan

Termination of an existing loan

In principle, all types of loans can be canceled by the borrower. However, there are specific deadlines to be observed, which are the minimum that must be observed by the consumer. Contractually agreed regulations that are more favorable for the consumer have priority.

Fixed interest rate

If the loan is an installment loan with a fixed interest rate, it can be terminated by the borrower after a six-month period after receipt of the loan amount with a notice period of three months (see $ 489 (1) BGB).

Variable interest rate

If the loan is a loan with a variable interest rate during the term of the loan, the borrower can cancel it at any time with a notice period of three months (see Section 489 (2) BGB).

fixed interest rate agreement

A loan agreement with an agreed rate fixation can either be terminated after the fixed interest period has expired with a one-month notice period or, if more than ten years have passed since the loan amount was paid out, with a notice period of six months.

If the cancellation is made on time and confirmed by the bank, the borrower has two weeks to pay the remaining amount due. If he lets this period pass, the termination becomes ineffective.

Termination on the part of the borrower cannot be excluded by contractual agreements (see § 489 Paragraph 4 BGB). This also applies to clauses that may be contained in the bank’s general terms and conditions.

If the borrower agrees to reschedule with his bank, the existing loan can either be terminated by mutual agreement or the contract can be changed purely. Legal deadlines are then not to be observed.

Possible consequences of early loan repayment

Possible consequences of early loan repayment

Most credit institutions and banks provide for the payment of a so-called prepayment penalty by the borrower in the event of early loan repayment. This is justified with the expenses arising from the replacement and the loss of profit due to the shorter contract term.

The prepayment penalty is legally stipulated for mortgage-backed loans (see § 490 BGB), but not for other forms of consumer credit. Conversely, banks are also not prohibited from charging prepayment penalties for conventional loans. A corresponding contractual clause is therefore to be regarded as lawful.

However, the prepayment penalty cannot be claimed if the borrower exercises his right of termination within the statutory notice period. Such a contractual clause would then be considered null and void.

If the borrower does not terminate within the statutory deadlines, the prepayment penalty in the amount of the lost interest profit for the difference can be raised up to the possible time of the ordinary termination.

Many banks refrain from collecting a prepayment penalty and instead charge the borrower processing fees for the early settlement of the loan. These clauses are legal and cannot be challenged.

Conclusion on early loan repayment

 

Before an early loan repayment is initiated, it is advisable to make a precise calculation of the current and future cost situation. As many factors as possible should be taken into account in this calculation in order to be able to accurately assess your own economic situation and performance. Credit offers can then be checked on this basis.

Attractive loan offers are very common, but instead of accepting them directly and thinking about a replacement, you should first submit the offer from your own bank and try to improve the current conditions in the existing contract. Due to the high market pressure, the banks are often willing to meet the customer in order to retain them.

If there is no room for negotiation at the bank, a detailed check should be carried out before a loan is terminated to determine whether this would result in a financial advantage. Above all, a possible prepayment penalty or a contractually fixed processing fee can cancel out the interest advantage of a new loan.

Special repayments as an alternative to loan repayment

Special repayments as an alternative to loan repayment

Many banks give their borrowers the opportunity to make special repayments to reduce their debt. Special repayments are contractual extra payments to the credit account and reduce the interest charge accordingly.

Special repayments can usually be made by contract at the earliest after a six-month period has elapsed and, in addition, must not result in the monthly repayment being reduced. Only the remaining term of the loan can thus be shortened.