However, the banks have taken precautions and are trying to make the debt rescheduling difficult. Depending on the type of loan, there are different rules for prepayment. You should always quote rescheduling and not choose a pointless loan. Because you can receive non-binding offers with a debt rescheduling loan. In this case, however, this only applies to the debt rescheduling loan.

Is it possible to increase the repayment term?

Is it possible to increase the repayment term?

A borrower may want to change the duration of an existing loan for several reasons. For example, it may be an excessive monthly installment, an unexpected cash gain, or a financial bottleneck. Mostly, however, the loan period to reduce the monthly burdens should expire.

But is that even possible with an existing loan? What should the procedure be for extending the deadline and what should be taken into account? Is it possible to extend the duration of an existing loan? When renewing an existing loan, it should generally be said that the borrower has no legal right to this contractual amendment under a model contract.

In credit talks, some banks now offer their customers the option of a variable interest rate adjustment, although there are usually lower and upper limits for lending. Thus, the mobility sought by the borrower is rarely free and must be discussed with the relevant lender before conclusion of the contract. Forward transactions, which can be achieved, for example, by a shift in the lending rate, can usually be carried out many times.

However, it is always about the service and goodwill performance of the lender, who can co-determine the desired contract change completely independently. If you want to change the duration of a loan with your bank, you should definitely ask for an individual interview with your caregiver. Because in practice goodwill decisions are usually taken to extend the time limit, it is extremely valuable that the borrower contacts his or her home bank candidly, honestly and best with regard to his or her concerns.

A personal consultation appointment can be arranged with just one telephone call to the corresponding house bank. If the lender is a direct house bank, the matter should as far as possible be resolved by telephone and then settled in writing by post or e-mail. It is necessary to explain the causes (eg temporary unemployment) for the desired maturity extension, so that the house bank can get a more accurate picture of the personal situation of the borrower.

In principle, the duration of an existing loan can be extended by two variations: firstly, the loan term agreed in the agreement can be completely suspended or postponed for a certain period of time. In the event of a deferment of credit, the borrower will be entitled to the full installment payment for a time agreed with the principal bank, free of charge.

The accrued interest is accrued on the loan amount and thus increases the absolute residual debt. The credit target is extended by at least the time of the shift, eg six years. On the other hand, there is the possibility of lowering the monthly lending rate in order to “drive” a compromise between monetary liquidity and ongoing loan repayment.

In both options, it is essential to pay attention to the conditions under which the lender in question extends the term. In the event of a deferred payment, in addition to the interest payments, in some cases there will be a one-off deferment fee, which will increase the processing costs of the house bank and may be between 50.00 and 250.00 USD. For this purpose, it should be noted whether and how the house bank informs the requested transfer to the credit bureau.

Many banks will draft a new loan agreement for a requested interest rate cut. Often, however, this does not only include the desired more favorable, but in some cases also a higher interest. In the case of an “internal rescheduling” an adjustment of the conditions upwards is not uncommon, so that the borrower increased expenses incurred during the further repayment period.

According to the judgments of the Federal Court of Justice of 2013 and 2014, the classic settlement fees are no longer required if a house bank reschedules its own loan. If the current lender completely rejects the targeted maturity change and does not anticipate any prospect of housing, there is, above all, a targeted path leading to a new loan agreement with a lower monthly installment.

Repay a new loan

Repay a new loan

In some cases it is much easier to repatriate debt, ie to repay a new loan than to change an existing loan contract. At present, borrowers can also benefit from the traditionally low interest rates. Debt rescheduling is difficult only if the borrower does not currently have the usual credit requirements (permanent employment, ability to provide capital services, etc.) and thus is not creditworthy.

No other institution is approved in this case to grant a repayment loan, which is why the borrower depends on his current lender. Conclusion: If the contract term of an already existing loan contract is to be extended by delay of payment or installment reduction, above all an intensive one-on-one discussion with the lender is important.

Unless otherwise specified in the loan agreement, borrowers have no legal right to an extension of the term. Borrowers in financial distress are therefore always dependent on a goodwill decision. Often, however, the banks will advise you if you want to extend the term. As a borrower, however, you should always pay attention to what fees are charged by the house bank and if the interest rate increases as a result of the contract change.

Since many banks conclude a new loan agreement to reduce rates, cost-increasing condition adjustments are not uncommon. Therefore, it is not unusual for the terms to be adjusted.

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