Loan credit: advantages, disadvantages and overview
It is advisable to get an overview of your own financial products on a regular basis. With financing, the borrower is usually tied to a contract for a long time. However, interest on loans fluctuates considerably in some cases, so that at times when they are at a low level, it may make sense to replace the previous loan and take advantage of better terms from another bank, so that the entire loan becomes cheaper.
Loan credit – what does that mean exactly?
If you redeem a loan, you take out another loan at another bank on better terms. The borrower therefore pays off the old loan in one go with the loan amount from the new loan and from now on pays the cheaper rates for the new loan. The better conditions make the loan cheaper. It is important, of course, to find out in detail about the conditions and the costs involved before you redeem the old loan. Consumers can pay off almost any loan. Installment or overdraft facilities are often repaid.
The benefits of redeeming your old loan
Repaying the loan is the best way to react to a change in interest rates, as the market is subject to great fluctuations over the years. Due to the early repayment, the borrower secures the better interest rates and there is also the possibility to adjust the monthly rate to the new financial scope, since this too changes frequently over the years. For example, if the financial framework has increased since the loan was taken out, a higher rate leads to a shorter term and thus to a lower overall cost of the loan.
Loan credit – easily and quickly possible
It takes much less effort to redeem the loan early than is often assumed. If a suitable offer has been found, the old bank only needs to be informed in writing of the planned repayment of the loan. The redemption loan can then be taken out. This is often done on the Internet, since a good comparison of the numerous providers is possible online and thus usually much better loans can be found and selected. In the application, the purpose of “replacement” is specified. This tells the bank of the plan to replace the old loan. A comparison that is quick, easy, free of charge and without obligation shows within a few minutes which loan from another bank is cheaper.