Repaying loans and cutting interest costs

By reposting an existing loan, you can benefit from more favorable terms and reduce the interest cost of your installment loan. A loan reminder is much less complicated than it may sound.

Redirect old credit and use low interest rates

In recent years, interest rates on installment loans have fallen almost completely. So, if you have been repaying a loan for a long time, you usually have to pay higher interest costs than would be the case for a current loan. However, rescheduling reduces these interest costs. You take out a new loan and pay back the existing one. You will then pay lower interest rates for the later loan than for the previous one. In addition, you can arrange a new term that better suits your changing needs. It is also possible to combine several loans with a rescheduling into a single loan. This not only reduces costs, but also ensures greater clarity. Note, however, that not every loan can be repaid easily. If it is earmarked, for example as a car loan, it can be complicated. Be well advised in such a case.

Rescheduling step by step

But before you take out a new loan, you should exactly calculate whether the debt restructuring is actually worthwhile. First, determine what the remaining debt is with your current loan agreement. So you know what amount the new loan should have. Also, check if you have to pay a prepayment penalty on the current contract if you repay the loan early. These should be included in the comparison of conditions. Then you can search for a new loan offer. Be sure to use the effective interest rate for comparison. Otherwise you will not be able to reliably compare the conditions. Calculate how much you still have to pay for your current loan or your current loans – including any prepayment penalties. The sum you compare with the total cost of the new loan. The difference shows you how much the savings in interest costs are. If you are convinced of the new offer, take the installment loan and use it to repay the existing loan early.