Debt Settlement Loan – take out a loan to repay debt


Repaying a loan with another loan does that make sense? Yes, that makes sense, but only if the bottom line is savings. This happens when the liabilities are combined, the loan term is extended and the rate is reduced. If this is not the case, then you should not take out a loan to repay debt.

The loan for debt repayment – the outlook

The loan for debt repayment - the outlook

Nowadays a lot of consumers have to pay several loans and not only that, there are also often payments by installments from the mail order business. All of this brings many to the edge of their financial possibilities. In other words, the installments are only paid with difficulty and maybe one or two installments have been forgotten. Of course, this does not happen if all loans and installments are combined into one loan, so that only one creditor has to be paid.

There are also still some loans to be serviced that were concluded a few years ago and where the old interest rate is still. However, since there is currently an absolutely low interest rate phase, a loan could be taken out to repay the debt. The result would be low interest rates and an overall cheap loan.

But not only liabilities inform of credit, also the overdraft facility is in the red for many consumers. As the overdraft facility is the most expensive loan at all, it should definitely be included in a loan for debt repayment. The overdraft facility used by many customers over and over again is actually only intended for short-term use. For example, if an important invoice still has to be paid at the end of the month and the account is empty. The overdraft facility can do a good job, but not if it is used beyond the credit line.

In addition to the two-digit interest rate level that the overdraft facility has, there is an additional 5% interest rate, which can then amount to an interest rate of no less than 18%. An expensive affair that should be more than wisely converted into a debt repayment loan.

The conditions

The conditions

Of course, just like with other loans, the credit rating of the debt repayment must be correct. In addition, the income is put to the test, the credit check is queried and the permanent employment is checked. If these framework conditions are right, there is nothing standing in the way of a loan for debt repayment.

However, a lot must be taken into account when taking over old debts. There are, for example, the notice periods. If the credit agreement has no passage that free special repayments can be paid, the bank can calculate a prepayment penalty. The reason for this is that when borrowing, the bank calculates interest that is calculated for a certain term. If the loan is redeemed prematurely, the bank loses this interest, which it compensates with a prepayment penalty.

For this reason, a free special payment should be noted in the new loan agreement. A few years ago, this compensation was so high that rescheduling no longer paid off. Since 2010, the legislature has put a stop to this, and from this point on, banks can only calculate up to 1% of the remaining loan amount as compensation.

However, the bank will only agree to rescheduling if no payment irregularities have become known in the past. With the framework conditions, these are the best prerequisites for taking out a loan for debt repayment. Before doing so, consumers should definitely do a credit comparison for free. This comparison shows the cheapest provider. The loan application can then be made directly via the comparison. The customer should also know that if he rescheduled the bank where the old loans were taken out, compensation may be lost.

Then there are only the normal loan costs. If the customer is not satisfied with the conditions of the house bank, he can search for a new provider with the comparison as mentioned before. However, it should be noted that the interest shown that many of the providers show on their pages do not apply to all customers. Creditworthiness counts again here. Interest is calculated depending on the creditworthiness, which means that he has a good credit rating, he also receives good interest and vice versa.

The credit check free credit

The credit check free credit

The credit check is queried for each loan. If negative characteristics are noted in it, this has a bad influence on the customer’s creditworthiness. As a result, he will no longer receive a loan from a conventional bank. The credit default risk is then too high for these banks. But there is also a way out for these customers and that is called credit check-free credit. Anyone looking for these loans on the Internet inevitably comes to the pages of loan brokers.

Credit intermediaries have the advantage that they can still provide customers with limited credit ratings a loan to pay off the debt. The customer should know that these loans come from abroad and now mainly. In the past, the Confederation was predestined for these loans, but a lack of a banking license ruined many agencies.

However, customers then found that the selection of credit check-free loans was very limited. The demand then brought a bank to the financial market. From there, the credit check-free loans come almost exclusively.

In order to qualify for the loan for debt repayment without credit check, the income must be above the garnishment limit. The credit check doesn’t matter. The income of a single person must therefore be 1,100 dollars net. If other people live in the household, the limit shifts upwards. Permanent employment is also required.

The loan application is made in the same way as for other loans, except that they are sent to the credit intermediary who forwards them.
At this bank, too, the general conditions must be right for a credit check-free loan to be approved.

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