For those who are stuck in expensive loans, there is a simple solution to improve the situation – change the loans. There are many good options that can save both time and money. By following them, it is possible to get a better interest rate and get rid of the debts faster. Many people believe that repayment of loans only applies to mortgages, but this is not the case.
It is important for all consumers who are stuck with expensive loans to become aware that it is possible to get help. It is possible to get out of tangible loans by letting a new lender pay back the bad loans with a new and better one.
If it has been a few years since you took the expensive loan, chances are good that you are today in a situation where it is possible to convert all loans into a new one with the lower interest rate that all creditworthy borrowers can be offered. Higher pay and less debt only two of many factors that may have improved to your advantage.
There are many benefits to converting expensive loans and credits
- By paying back the original more expensive loans with a new and cheaper one, which has other better conditions and lower interest rates, less money is put on interest costs.
- If a private loan is used to pay off on credit card debt, this means that credit utilization goes down, this is seen in a credit report and means that the credit rating is improved.
- The blank loans used to convert and collect old loans are loans that do not require assets such as housing or car as collateral.
Change lenders and get lower loan cost?
All loans can be changed, but in order for it to pay off, the old loan is more expensive than what can be offered on the market today. Although a new lender cannot offer a lower interest rate, it can be possible to get cash off with an equal loan by extending the repayment period and thus reducing the monthly payments.
If a borrower has paid in time for their loan over a longer period, it is possible that the credit points that all major creditors are based on have improved. If so, it is almost certain that a better loan offer can be obtained by turning to a new lender.
Take a new loan to pay back others
Another good reason to take a new loan to pay back another loan is that it is possible to raise the loan and thus access healthy cash. Check the box for “parts of the loan to be used to repay old credits” and choose a loan amount that is higher than the loans to be paid off.
When a bank loan is rescheduled, the due date can be extended depending on the amortization plan that borrowers and lenders agree. This can be either positive or negative depending on the borrower’s creditworthiness. By prolonging the repayment period, it is likely that the monthly amount will be reduced, but that means that the borrower remains with the debt longer.
Anyone who is thinking about converting loans should be careful about which choices are made by the new lender and consider whether a new solution instead risks leading to an unnecessary extension of the repayment period. Since the terms of an unsecured loan are determined by the borrower’s creditworthiness, the offers from banks and other creditors are different for all customers.
It is only a better credit rating, an improvement in the financial situation or by finding a cheaper lender that can successfully refinance expensive loans and get a better loan solution. If you have old expensive credits or blank loans that are too expensive, there is every reason to consider collecting the loans with a new and better loan solution.
Checklist for laying over expensive loans
- Credit rating
Before you take the step and apply for a new loan to collect old expensive credits, you should first ask yourself if your credit history has improved enough to enable you to get a cheaper loan offer.
If your credit score was not the best when the old loans and credits were taken and you made your monthly payments on time, your credit rating is most likely already better. A new lender will review the development of utilized credit as evidenced by a credit report and assess whether they want to pay off your old debts by granting a new loan.
If you continue to make payments on time to the new lender, it is easier to after some time bring down the interest rate also on the new loan because a customer with a larger loan always has a better negotiating position a little.
To show in different ways that you are a good business for a new lender is one of the most important things you can do to successfully convert expensive loans and get the loan costs up and running.
- Compare offers from lenders
Once you have reviewed your finances and found that it should be possible to borrow cheaper, it is time to contact new lenders for offers. Make the lender aware that you want to use all or part of a new loan to pay back old, more expensive credits. If you get an offer you are not satisfied with, do not hesitate to submit a loan application to other banks and credit market companies and make a comparison.
By comparing loans from several different lenders, it is possible to choose which one is best. Choose two lenders that work best and choose the one that gives the best bid. Most creditors look favorably on customers who want to use a loan to convert expensive loans so there is fierce competition for providing good terms to that customer category.
- Consider P2P lending
If you are not satisfied with the offers you receive, an alternative is to seek a loan from alternative sources.
A new digital marketplace for loans between private individuals is peer-to-peer lending where individuals give loans to other private individuals. Investors participate in lending groups and earn money from the interest they receive on their loans.
These loans can mean a lower cost than ordinary lenders, as many individuals are content with a lower interest rate to lend money (the bank interest rate is zero) than banks.
- Borrow online
Replacing expensive loans at the bank and reporting all the old expensive loans that you want to pay back can be a both cumbersome and embarrassing process. Instead of filling in a lot of paper, it is easier and faster to turn to one of the new and more flexible lenders offering good internet loans through their online business. This means that you do not have to fill in complicated papers and answer questions from a diligent bank employee before the loan can be made clear.
- Get answers to questions
Basic information such as social security numbers and bank accounts for the payment of loans must always be submitted with an application. If there is an option for solving old loans, it should be ticked.
Supplementary questions may come at a later stage if the loan is not granted directly. But the borrower should also ask questions and be informed about the conditions that apply. These issues should include, but are not limited to:
- Is there an application fee?
- What is the repayment period?
- Are there any restrictions on how I can use the money from the loan?
- Are there any hidden fees?
After you have been approved for a loan that is wholly or partly used to repay other loans, the new lender will take care of closing and paying back the old loans. You will receive a letter with the mail from your old creditors that the debt is paid. The end result of the change will be a new bill with a lower amount than the sum of all the old credits, which will give more money in the wallet and a more enjoyable personal finances.