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How many credits can you have? Two, three or more?

How many loans do you get? From the banks’ perspective, the answer is simple. As many credits as there are credit ratings. Banks want to sell loans as much as possible.

If the freely disposable income determined according to the guidelines of the bank is still sufficient for a new loan despite payment in installments for the existing loans and if the credit score is in order, banks have in principle no problems with lending.

But from your point of view as a borrower, what is it like when there are two, three or even more loans at the same time?

Is it really advisable to have many loans next to each other? If not, how can you prevent multiple loans from being serviced at the same time?

Multiple loans side by side: practical examples

If you have read our introduction, you already suspect that we do not consider many loans to be particularly recommended at the same time. But in some cases, another solution is not possible at all or is very impractical. And then there are exceptions.

Imagine you want to build a house and of course, you need a real estate loan. A house loan of 250,000 dollars is actually sufficient. But your creditworthiness and your freely disposable income are good for 300,000 dollars.

Before you plan to borrow, you understand that you will be spending more soon. At least they need a new kitchen and they urgently need a new car.

Since your own funds are to be used for the new house except for the famous nest egg, only credit financing remains. Isn’t it a good idea to finance both together with the house and to raise 300,000 dollars instead of 250,000 dollars?

Your bank will likely go along with this, especially when it comes to financing the kitchen. But is a credit increase really cheap from your point of view? It depends on it.

First of all, you benefit from low building interest. They are cheaper than purchase or car loans. But the terms are longer. You carry the additional financing with you over the entire term and thus increase the entire interest burden.

And above all: The interest rate for the real estate loan can increase due to the additional charges because a higher percentage of the mortgage lending value has to be financed with debt.

Including the kitchen and new car in real estate financing can be worthwhile, though the nominal interest rate does not increase due to the higher loan amount and You are able to reduce the additional loan amount by special repayment within a reasonable period of time to the extent necessary for real estate financing.

A prerequisite for special repayments is that they are contractually agreed upon. Free special repayments are now standard for real estate financing.

It will regularly make sense to include the new kitchen or furnishings in real estate financing, while other purchases, such as a car, should be financed through normal installment loans.

In our initial case, you will really have two loans side by side. The real estate loan and separate car financing.

This means that you are in good company with many consumers and it makes sense to separate the two types of financing.

A loan is often taken out for a specific purpose and later during the term of the loan, it turns out that money is needed for another purpose.

Credit increase: what to consider?

A credit increase is a debt rescheduling that is carried out with the lender of the existing residual loan.

In the actual sense, it is always a new loan in the amount of the new amount required plus the remaining amount from the old loan. The remaining loan is paid off and the excess amount goes to the borrower. A new credit check is regularly carried out before a credit increase. In addition, the current interest rates apply.

The annual percentage rate may be higher or lower depending on the customer’s current credit rating and the interest rates the bank offers at the time the loan is increased. Since this is a new loan, not only the amount of the loan can be changed. It is also possible to adjust the runtime.

The term of the top-up loan can be as long as the remaining term of the original loan. The term can also be shorter or longer. Anyone looking for a top-up loan is negotiating a completely new loan. Therefore, he has to prepare well beforehand.

Good preparation, including the compilation of all documents, is particularly important if the negotiating partner is the house bank.

Once the borrower has compiled all the documents relating to his income and liabilities, has a clear idea of ​​his financial options and can specify the terms it takes to pay off the increased credit, he leaves the house bank clerk with the impression of a reputable customer. The bank will then be more willing to grant a top-up loan.

Debt rescheduling

A debt rescheduling loan is used to summarize and redeem one or more loans.

The desire to redeem expensive old loans is often the reason for debt restructuring. In addition, debt rescheduling can also make sense to combine an unnecessarily large number of small loans into a single loan.

It is, therefore, optimal to make one out of many loans and also to save interest. The debt rescheduling can be carried out together with a bank that has issued one of the remaining loans.

It is also possible to take out a debt rescheduling loan from a bank that has not previously participated. This solution is sometimes cheaper because they are new customers. Existing customers who want to implement a refinancing request are sometimes not treated as well by banks.

If you opt for a debt rescheduling loan from a third party bank, you can contact a number of branch banks or look around on the Internet to find a cheaper solution for your refinancing.

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