Increase credit during termOn January 26, 2020 by Marlene Niemeyer
Many consumers have one or more loans that accompany them for a certain period of time. Nowadays, this is no longer uncommon and completely normal when it comes to the financing of everyday objects or the purchase of a property or a vehicle.
However, some of the borrowers find out during the repayment that the money already borrowed is not sufficient to fulfill all wishes or implement ideas. The thought quickly arises to increase the loan during the term. But is it that easy? Can a loan work increase during the term? And if so, how?
Can a loan work increase during the term?
In principle, increasing a loan during the term is not a problem. Banks and savings banks are used to their borrowers changing their wishes once again during repayment and a corresponding adjustment must therefore be made. As a rule, the old credit line is then simply expanded without changing the interest rate. The borrower can then either choose to extend the term of the loan or adjust the rate upwards. Depending on what is desired and what is the better alternative for the borrower.
What are the requirements for increasing a loan during the term?
Even if the aim is only to change the old loan agreement, the bank will not let it go and check the creditworthiness of the borrower. This means that the Credit Bureau is queried and the income is compared. If everything still fits, the loan can easily be increased. If there are problems, it may well be that the bank demands more security. A guarantor may then have to be called in or the bank suggests taking out residual debt insurance. However, these are always individual decisions that can be different for each borrower.
Another loan helps if necessary
If all efforts to increase the loan during the term fail, there is still the possibility to take out a new loan that is completely independent of the first loan. This can have advantages as well as disadvantages.
This measure can always bring advantages if the interest rate for the new loan is located below the offer around the current loan. Then you get a saving that even leads some borrowers to consider simply repaying the old loan. A debt rescheduling is only worthwhile if the old bank does not charge any fines and if the loan has a longer term. Otherwise, the savings are disproportionate to the effort that has to be made as part of the debt restructuring and the debt restructuring would not be worthwhile.
We also recommend that you increase the duration of the loan before the loan or make a comprehensive comparison of various offers before taking out a new loan. This is the only way to decide which route is the best. For a comparison, a loan calculator must first be called up. In this you enter the desired loan amount. In addition, information on the duration and the desired rate must be provided. From this information, the loan calculator will form an offer that best matches the borrower’s wishes. If you like the offer, you can compare it with the conditions of the old loan. If the conditions for the new offer are worse, the old loan should be increased. However, if the conditions are better, you should consider taking out a new loan.