Merging multiple loans can save a lot of money. How does the refinancing of a loan? This may seem complicated, but in practice it is very simple. The most important thing is to look at the current credit rate. You can often save a few tens to hundreds of US dollars per month.
Expensive loan with high interest
Credit interest rates have slowly started to decline from 2015. In 2020 they will be historically low. For example, you pay an interest from 3.8% for the personal loan. In 2008, the same interest rate quickly reached 9%.
Unfortunately, many people do not think about it: refinancing an expensive loan. While an interest rate of 1% to 3% lower already reduces the tax burden. Some people have several loans. Combining these loans also results in lower monthly costs. Also consider a mail order credit, credit card or overdraft at the bank. These are incredibly expensive loans where the interest is alarmingly high.
How does a loan transfer work?
Is it difficult to refinance a loan? No, anyone can do it. All you need is the details of your current loan or loans. Then you indicate whether you want to borrow an extra amount. In many cases this is possible.
You submit the application online. This saves time and a trip to a bank or credit provider. This makes it very easy to transfer a loan.
Compare interest rates properly when refinancing
If you want to save money on your current loan, it is important to compare interest rates well. Despite the historically low interest rates , there are still differences. The condition also differs per credit provider. Fortunately, it is possible to request multiple quotes. Place these next to each other and look at the differences.
Personal loan or revolving credit
When transferring a loan, you are always asked whether you want a personal loan or revolving credit. What is the difference between the two?
A personal loan is completely tailored to you. You receive a loan amount that also matches your income and living situation. You pay this amount back in monthly installments. The interest and term are fixed, so clear.
Do you need money more often, for example because you are not only going to renovate now but also in the future or want to buy something? Then the revolving credit suits you better. This loan form is slightly less popular, this is because the interest is a bit higher. You repay the outstanding amount in monthly installments. The term is variable (maximum 15 years). The interest is also variable, but you do not notice much of this because the monthly costs remain the same.
You can make additional interim repayments with both the personal loan and the revolving credit, this is penalty-free. It is therefore always advisable to do this, this will reduce the total loan amount.
Assessment of your application
You have applied for the transfer of a loan or the merging of several loans. How does this proceed? The credit provider will assess your application. By sending as much information as possible, this assessment will proceed faster.
As soon as your application has been approved, the lender will arrange the transfer of the loan. If you have asked for an extra loan, you will receive this extra amount quickly in your bank account.