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Debt Rescheduling – Advice & Tips

With debt rescheduling, you can secure cheaper interest rates. See for an example

Are you paying off one or more loan and the monthly charge is too high for you? Then you owe money! Agree with the banks a summary of each loan at a lower interest rate. Debt restructuring is worthwhile now that the key interest rate is a low 0.05 percent (as of October 2014).

If you want to convert an existing loan into a lower-interest one or combine several loan, you can do so with an early redemption or rescheduling. The total loan amount remains the same. However, new conditions are agreed. For example, longer loan terms associated with lower monthly installments and a much cheaper interest rate.

If you are thinking about rescheduling, you should first look at the offers of various banks and pay attention not only to the effective annual interest rate, but also to the terms and conditions. There are often hidden clauses in the small print.

Benefit from low interest rates

Benefit from low interest rates

Since the bank cut its key interest rate to 0.05 percent in September 2014, interest rates for loan have also dropped at many banks. You can now get a consumer loan from many direct banks at an interest rate of 3 percent. If you pay 6 to 8 percent APR for your current loan or up to 12 percent for your overdraft facility, it may be worth repaying or rescheduling several loan.

Please note: Debt restructuring is often not possible with negative credit rating entries.

You have to consider this when rescheduling

You have to consider this when rescheduling

First, you should determine whether your loan or your current loan can be rescheduled at all. If there is a notice period, debt rescheduling or loan repayment is often not possible. Your contract documents state whether a notice period was set when the contract was concluded. Please take them on hand and have a look. Is it possible to redeem the loan? Good. Then you will find out what the fees are that are due if the loan is canceled or redeemed early. These should be listed in the loan agreement.

Also check your contract to see if it is a floating rate loan. If so, you have the right to early termination pursuant to Section 609a of the Civil Code. Section 2 states: “The debtor can terminate a loan with a variable interest rate at any time with three months’ notice.”