A debt rescheduling occurs when an existing loan is replaced by a newly agreed loan contract. In principle, debt rescheduling pays off as soon as current interest rates are significantly lower than under the old loan agreement. Furthermore, it is not imperative that the new loan come from the same bank as the old loan.
In any case, you should work out the interest savings in order to be able to compare how much money you can actually save. A debt rescheduling loan is particularly worthwhile if the annual percentage rate on the new loan is far below that of the old loan.
Debt restructuring is also worthwhile if the loan amount and the remaining term of the contract are very high. You can find out more about the subject of installment loan rescheduling in this article.
Why should you think about debt restructuring?
Installment loan rescheduling is a good solution if the installments of the old loan are much too high. Sometimes you only realize after the conclusion of a loan contract that the monthly installments are far too high and overwhelm you financially, so a new loan contract with a longer term and lower interest rates can help you in the long run. However, you should note that the longer the term, the more faithful the loan.
But sometimes that’s still the best option. Otherwise you run the risk of falling into a debt trap, so monthly payments should always be adjusted to your financial situation. According to the EU Consumer Credit Directive, consumers have the right to repay a fixed-rate installment loan in full or in part at any time earlier than originally agreed.
What are the advantages of debt restructuring and what should you consider?
One advantage of debt restructuring is that the new loan is usually cheaper. Usually, you should think carefully about whether an installment loan rescheduling is worthwhile. If it is only a small amount of money, it is quickly paid off and is not worth the conversion.
If, however, it is a very high sum, then debt restructuring is worthwhile. This can save you a lot of money. Nevertheless, you should also be careful with a debt rescheduling in order not to get into dubious loan providers and then calculate the loan nicely. It is essential to clarify in advance whether your old loan can be canceled at all and whether early repayment is possible.
Take a look at their previous contract and check whether there are any fees due for the replacement. Only then should you choose a new loan and save a lot of money.