Installment payments are annoying because they limit the monthly budget. As a rule, the conditions are fixed with the bank. But changes in your favor are often possible anyway.
8 tips on how to pay less for your payday loan.
This is how you proceed
- 1. Take the documents of your existing loan at hand.
- 2. Compare the interest rates at that time with the current market conditions today. Use the comparison tool below to calculate your new loan installment.
- 3. Or inform yourself about further possibilities of rate reduction.
Take a break
The repayment of a loan usually extends over a longer period of time. Since it is a planning in advance, it is impossible to consider all contingencies. For example, changing living conditions can mean that the loan can no longer be serviced at least temporarily. Then a payment break can be useful. Some payday loan agreements allow for the interval break within a certain quota without justification. Others require a prior agreement with the bank and a specific reason. Talk to your bank adviser.
Note : Pausing by the Bank may be subject to certain conditions. For example, some loan agreements must already have received a certain number of loan installments. Inquire about any fees.
Often, due to their current financial situation, it is not possible for borrowers to make special repayments or to repatriate loans. For example, if the monthly interest burden is too high. To reduce this, you should contact your bank. Banks often agree to permanently reduce the monthly interest burden. In return, the term of the loan is extended.
Note : The prerequisite for this, however, is that you, as a borrower, also have sufficient creditworthiness over the extended term. Because only if the repayment of the loan is secured, the bank gets involved in such a deal.
Make special repayments
Special repayments provide an easy way to pay off existing debt faster. If the remaining credit contract decreases, the credit rate can also be reduced.
Definition : A special repayment is a repayment in addition to the normal loan repayment in one amount.
However, this requires that you have liquid funds at the time of the required special repayment. However, as special repayments reduce the Bank’s interest income, this type of loan repayment is not so popular with banks. Whether additional repayments are possible depends on the rules in your loan agreement. Some credit institutions charge fees for this, which may amount to a maximum of 1% of the remaining debt still to be paid. If a special repayment is not possible, it is still possible to terminate the loan in whole or in part.
Tip : Check your payday loan agreement to see whether special repayments are possible. If in doubt, ask your bank adviser. Also ask about the charges.
To summarize several loans
Often, debtors have more than one loan. This easily creates a confusing situation, which makes repayment considerably more difficult. In this situation, it makes sense to combine several loans into “one”. This corresponds in principle to a rescheduling, except that just several loan agreements are involved. This approach makes sense if several different loans (eg, disposition, credit card debt, consumer credit, trade credit) exist at the same time. This will give you clarity, pool resources, and facilitate repayment. If the new contract has a lower interest rate than the old loans, you ultimately lower your credit rating.
Reduce credit rates through rescheduling
The key interest rate policy of the Bank has also led in recent years to a significant reduction in interest rates on consumer loans, see installment loan comparison. There is therefore a certain likelihood that you will pay more for your current loan than the market rate. If this is the case, it is advisable to carry out a debt rescheduling. However, you should be aware that some banks charge a fee of up to 1% of the balance on early repayment of the loan. For loans already completed before June 10, 2010, this fee may be higher. Before rescheduling you should definitely study the contract of old credit.
This is how a rescheduling works : To do this, you take out a new loan in the amount of the remaining outstanding debt of the existing loan. They use the money received in this way to repay the old loan in one amount. In this way you end the current loan. You benefit from the lower interest rates on the new loan and can lower your credit rating.
Make individual agreement
Contact with the bank must not be lost on any loan. If you have problems with the repayment, you should go to your customer advisor on your own and describe your situation to him. If you convince the bank of your willingness to repay, this may take a step towards you. The repayment of the loan amount is finally in the interest of the bank. So it is quite possible to make individual arrangements that are tailored to your specific individual case. The agreement may result in a reduction in the monthly rate if, for example, the interest rate is adjusted or the term is extended.
Tip : The chance of an individual agreement is much higher if you address your bank adviser in a timely manner to your situation. Once your financial situation has come to a head, chances for a mutually satisfactory solution are rather low.
Total refund / cancellation
If the financial situation changes for the better, and you just want to get rid of the installment charges, there is the following possibility: A consumer loan agreement can now be completely paid back even during the term. Total repayments could theoretically be considered as a special form of special repayment. It is rather a complete termination of the contract. The borrower declares in writing the termination of the loan agreement. The bank is obliged according to § 500 BGB to accept both a partial termination and a complete termination of the contract. The consumer only has to observe a notice period of one month. The Bank may demand a compensation for the loss of interest.
Note : Please note that the withdrawn loan amount is due immediately by the bank. This means you have to pay back the amount due in a sum usually within two weeks.
Use faulty cancellation policy
Consumer law has been massively strengthened by numerous EU regulations and directives. For some years, loan agreements – this applies in particular to mortgages – must be provided with a comprehensive cancellation policy. This is often flawed in practice, which allows borrowers to terminate their loan agreement even after several years. In the course of a termination due to a faulty cancellation policy, customers can fully repay the loan amount received, without paying the estimated interest.
Tip : Check the cancellation policy in your loan agreement. If this is faulty, you can reclaim all or part of the interest paid from the bank. However, be sure to contact a professional in this matter, such as an adviser to the Consumer Department or a specialist lawyer.