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Debt restructuring as an interesting option

Debt restructuring as an interesting option

Due to the fact that the banks today offer many different types of credit, it is quite common for a borrower not to choose the loan option that best suits him or his goals. In these and some other cases, debt restructuring can be a very interesting option.

A debt rescheduling basically means that an existing loan is repaid in whole or in part, which is done by taking out a new loan. In many cases, this new loan is also called a debt rescheduling loan.

There are various areas in which refinancing, as debt restructuring is sometimes referred to, can make sense in practice. Debt restructuring, for example in the area of ​​real estate financing, is almost the order of the day. But more and more consumers are also using a very sensible option, namely to convert a overdraft facility into an installment loan. In addition, the refinancing can also be useful in order to arrange the existing debts and to bundle them into just one “large” loan.

Debt restructuring in real estate finance

Debt restructuring in real estate finance

Debt rescheduling occurs very often in the area of ​​real estate financing because the duration of the fixed interest rate is very rarely identical to the total duration of the loan repayment.

In practice, for example, it is customary to choose a fixed interest rate over a period of five or ten years, while it can sometimes take 30 years or more for the entire loan amount to be repaid. After expiry of a fixed interest rate, refinancing always follows.

The debt rescheduling measure can either consist of extending the existing building loan at current conditions or taking out a new loan from another bank. Early rescheduling can also make sense. In this case, the customer redeems the building loan prematurely, which is usually a good idea if the current mortgage interest is significantly cheaper than the interest that the borrower currently has to pay in the course of the fixed interest rate. In this case, too, the new real estate loan would be called a debt rescheduling loan.

Debt rescheduling into an installment loan

Debt rescheduling into an installment loan

Debt rescheduling from a used overdraft facility to an installment loan is particularly economically attractive and makes sense in many cases. The installment loan can, for example, be an instant loan or a personal loan.

The most important thing is that the loan interest on installment loans is almost always significantly lower than the debit interest that the customer has to pay in the checking account when he uses his overdraft facility.

Incidentally, debt restructuring for the unemployed is also possible in this way. Because while the unemployed may have to pay interest of 12 percent or more on overdraft facilities, installment loans are now available from four percent interest.

This significant reduction in interest rates means that quite a few job seekers can gradually reduce their debts. Best Bank also offers very cheap installment loans, which can also be used very well for debt rescheduling, which we can recommend as the test winner anyway.

Bundling various loans into one loan

Bundling various loans into one loan

Quite a few consumers take out multiple loans at the same time. For example, the new car is financed by a car loan, while shortly afterwards a new living room facility and a vacation trip have to be financed by a loan.

In addition, there are often still installment payment agreements with mail order companies or other sellers. With many loans, it often becomes confusing for consumers to pay which installments to whom. Therefore, debt restructuring can also be useful in this case.

The refinancing would then simply look like that the consumer first takes out a new loan and uses the loan amount received to pay off all remaining debts of the existing loan. In the future, only a loan installment would then have to be paid, which of course is much clearer than before.