This also includes rescheduling a car loan. However, the conditions must be right and there must be savings in the end.
Interest rates are currently at a low level,
So many customers are wondering whether it would be better to reschedule a car loan. High interest rates and a long term or simply poor conditions put a strain on the monthly budget. A better situation could arise here if the old car loan could be canceled and a new loan could be taken out on better terms.
However, there is often the situation that the old car should be replaced by a new car. Then one speaks of a car loan rescheduling if the sale of the old car does not provide the value to repay the current loan. The sales amount then flows into the car loan rescheduling. The advantage that can result from this is a better interest rate, a moderate term and also a monthly relief of the current budget. However, if the car is sold to a private individual, the customer can freely dispose of the sales amount or be included in the new loan.
Existing car loan is replaced by applying for a new loan
In the case of rescheduling a car loan, an existing car loan is replaced by applying for a new loan. However, this should only take place if interest rates are reduced, since the old loan was taken out with poorer terms at the time. A debt rescheduling can also make sense for the vehicle owner if the car was financed through a car bank, but the customer is not in possession of the car, as it was deposited with the bank as security during the credit period.
Some vehicle owners find it important to hold the vehicle letter in their hands again. Nowadays it is not uncommon to pay several loans. There the car loan was taken out, the new furniture was financed and the new dishwasher was bought in installments. All installments are debited monthly at different times. The whole financial situation is confusing and should finally be sorted out.
It can be an advantage if all existing liabilities are combined into one loan, which also has better conditions. With a loan comparison, the customer can view the best loan offers on the financial market. When banks reschedule a car loan, they usually require that all liabilities flow together with the new loan. Many banks do not pay out the loan amount, but instead pass on the transfer fee to the other lenders.
In summary, it can be said that if the car buyer finds a bank with better conditions during the term of his old loan, he can take out a loan and redeem the loan from the dealer bank. However, the fine print should also be read here. The prepayment penalty is important. This compensates for the lost interest. Depending on how it turns out, debt restructuring may not be worthwhile.
Find a cheap loan
Generally, with a debt rescheduling, regardless of whether it is a car loan rescheduling or whether other loans are to be rescheduled, it is important to find out what the loan conditions are. Many lenders ask for early repayment penalties if a loan is canceled early. The bank thus compensates for the interest it has lost. If there is the possibility of a free special repayment, then the car loan rescheduling is free of charge.
However, debt rescheduling loans can often be found so cheap that the cost of prepayment penalty is not a significant factor. If you want to bundle your loans, you should definitely make a loan comparison. There the customer can see the cheap car loans, so that a considerable amount can be saved. Especially when the car is to be financed by an independent bank.
New consumer credit guidelines were introduced in 2010 regarding the amount of the prepayment penalty. This gives borrowers the right to cancel loans. The bank demands compensation, but this may only make up one percent of the transfer fee. If the loan has a term of less than one year, only 0.5% percent can be calculated as compensation.
It is also important to mention that it also depends on the type of loan. There are auto loans where the final installment, i.e. the remaining amount, is only due at the end of the term. If you cannot pay them, you will have to take out another loan from a bank.
An example: In March 2002, a car buyer took out a loan of 15,000 USD with a term of 60 months at an interest rate of 11.9%. In March of the following year, i.e. after 12 installments, he replaced this loan. This reduces the credit balance by the interest for 48 months, i.e. 2828 USD. A residual debt of 12,923 USD thus remains. If he takes a new financing of 15,000 USD over 48 months at 0% interest, he has an interest saving of 2828 USD.
Calculate your income against your expenses
Before the customer wants to reschedule his car loan, he should still check where he is with his liabilities. The best thing is to calculate your income against your expenses and then see how much remains at the end of the month to pay your debt. With regard to several loan liabilities, there should be no danger that the overview will be lost. Debt restructuring can help by relieving the borrower of different payment dates.
What remains is a creditor and only a credit installment. It is important to know that if the old credit agreement was covered by a residual debt insurance, the time for which the insurance was not used will be reimbursed. However, the lender keeps the processing costs already paid.
Any excess credit may also be transferred to the car loan. This loan is very expensive, which is why it makes sense to redeem it.