Lower credit rates: four options

In recent weeks, many people have had to make do with significantly less money than they are used to due to the corona crisis. If you have to pay off loans in such an exceptional financial situation, you have four options for reducing your monthly loan installment burden. You can find out what these are and how you have to permanently pay less interest on your loan in this article.

Loan rates lower due to financial losses from coronavirus

Since the force of the current financial crisis means high economic losses for many self-employed and employees, the federal government quickly put together a care package that includes an exception for all loans that were taken out before March 15th: Those affected by the corona crisis can suspend loan payments until the end of June this year. For many self-employed and employees, this regulation reduces the burden of constant loan installments with less money in the wage packet.

First possibility: temporarily suspend credit installments

You can have your credit deferred. To do this, you must demonstrate that you have lost income due to the crisis and are therefore in an emergency. This is the case, for example, if you can no longer pay your rent. You can claim this special arrangement if you completed your loan before March 15th. The deferral includes loan installments through June 30. That means you don't have to continue paying your loan until July.

But even if you took out your loan after March 15, you can arrange a deferral with your bank. However, you then no longer have a legal right to it. If you run into trouble, you should contact your bank and ask as soon as possible. If you previously paid all installments in accordance with the contract have, and in have not taken out another loan in the past 12 months there is a good chance that the bank will agree to the deferral of the installments.

If the decision of your bank is positive, the exact conditions will be written in a deferral agreement detained. An essential element of a deferral agreement is, for example, the duration of the deferral.

Many banks offer online forms for submitting a deferral application. Just ask your bank.

What does deferral mean?

A deferral is the postponement of a payment that is due. Payments that are due will therefore be paid off at a later date. This leads to longer credit periods. If credit installments are deferred, additional interest, so-called deferral interest, may accrue. It is currently still unclear whether deferral interest also applies to the deferral of consumer credit for corona victims.

Second option: Rescheduling an expensive loan

In 2020, the interest rates for newly concluded contracts will be at a very low level. If you have an older current loan, you now have the chance to part with your expensive old loan. Debt restructuring can save you hundreds of euros or more. Furthermore, in the course of debt restructuring with the new bank, you can also adjusted monthly rate agree on which one might better suit your current situation. In the DKB* For example, the interest rates are just 3.49 %, regardless of creditworthiness. The bank is thus reducing the interest on its installment loan by 0.5 % from May 4th. 2020. You can find other suitable offers for debt restructuring in the Loan Comparison Calculator Find.

Important: Banks may for the early replacement of the old loan a so-called Prepayment Penalty Craving. However, this is regulated by law and may not exceed one percent of the remaining loan amount. Many banks charge between 0.5 to 1 percent of the remaining loan amount in prepayment penalties if you repay your loan early. So if your new loan is cheaper than the old loan plus the prepayment penalty, you'll save money every month. Of course you continue to save, even if the current crisis is long over...

Online debt restructuring without visiting the bank

in the credit comparison from Konto-Kredit-Vergleich.de you can find the best offers from numerous banks. In addition, the conclusion of the loan is for most offers completely digital possible. You don't have to print out any documents or go to the post office.

Option number three: adjust the monthly rate

Basically, banks often have an open ear when it comes to making a subsequent adjustment to your monthly loan installment. To do this, you can get in touch with your known contact person at the bank or with customer support. Online banks such as ING have a contact form in the online banking area that you can use for such inquiries. If you and the bank agree on the new rate, the next step will be a new loan agreement put on. However, this can be associated with costs.

By the way: If you get a salary increase, it can also be worth contacting your bank. Firstly, your credit rating may increase, which could give you better terms, and secondly, you could agree on a higher repayment so that the loan is paid off faster. This can save you quite a bit in interest.

Option four: suspend the installment payment

There are several loan agreements where a certain number of installments can be suspended by default each year without causing a breach of contract. The rules are quite different here. If you want to use this option, it is advisable to look out for a corresponding clause in your loan agreement and to seek talks with the bank as early as possible. It should be noted that if the loan installment is suspended, interest will have to be paid sooner or later. In addition, some banks charge a processing fee.

Also to note when suspending the installment payment: If you suspend one or more installments in this way, the term is extended your credit accordingly.

Permanently reduce credit rates through debt restructuring

If you have the feeling that you are trapped in a loan that is too expensive, debt restructuring on a cheap loan is the best way to reduce costs in the long term and not just postpone them to the future. A non-binding inquiry about the credit comparison will quickly clarify how much money you can save with a debt restructuring each month. The request only takes a few minutes. Debt restructuring can permanently lower your loan rates. In this way, even after the corona crisis, you will benefit from the currently very favorable interest rate level.

In general, unforeseen events can leave you with less money to pay off your loan. This also applies regardless of the current economic crisis. As soon as you get into trouble servicing your loan, you should proactively seek dialogue with your bank. An early discussion is often a good basis for finding a satisfactory solution for you and the bank.

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