“Optimize contracts” series: How to dispose of expensive loans
Very few pay attention to an optimal interest rate, especially with smaller loans. Maybe you know that. And with larger loans, for example for a new car, sellers often want to show off at low rates – but the big end comes at the end. Because a last high installment is often due for car loans; in total, such loans are usually too expensive. No wonder that one in four has “rescheduled”. Debt rescheduling means that you pay back your old, expensive loan early and take out a new, cheaper loan. How to quickly save hundreds of dollars in interest:
1. Obtain and correct credit record data
Before you look for a new loan, get free credit record information – this can now be done online (hidden at the bottom left under “Data copy”). credit record documents your creditworthiness. If the company has stored incorrect entries about you, you should definitely have them corrected. This may improve the interest rate that the banks offer you.
2. Find cheap credit
It is best to compare the loan offers on at least two credit portals: we recommend Fine Bank and Agree Bank
If you have found a cheap loan, be sure to fill out the online application very carefully. For example, if you forget to provide an existing loan, the bank could reject your application.
In any case, indicate that you want to reschedule. Otherwise, the bank assumes that you simply want to take out a new loan. If you grant the bank a power of attorney, they will take care of the processing of your old loan directly.
The bank with which you previously had the loan can request a small amount of compensation for early repayment: If the remaining term is more than 12 months, the bank may invoice 1 percent of the remaining debt (including 0.5 percent). For example, 100 dollars with a loan of 10,000 dollars.
3. Omit residual debt insurance
Important: Do not re-conclude “credit protection”! This is the residual debt insurance, which is unnecessary and expensive. If you get rid of such insurance along with your old loan, so much the better.
Insurance becomes void once you redeem your old loan. You get your money back for the unused time. Write a short letter to the insurance company asking them to transfer the outstanding premiums to your account. As a precaution, you should mention that you are terminating the contract.
If the insurance company refuses, you can contact the insurance ombudsman. It fights for free with the company for you.