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Renegotiate your credit – here’s how

Average interest rates are low and did you take out credit when it was higher? Renegotiating your credit can be an interesting solution. This operation allows you to benefit from a more advantageous rate to reimburse the current one.

 

The very low level of mortgage interest rates is a boon for mortgage borrowers

mortgage interest rates is a boon for mortgage borrowers

The solution naturally goes through renegotiating the loan. But this choice is not always interesting from a financial point of view and therefore merits prior consideration.

First of all, remember that the monthly repayment of a conventional loan is made up of interest on the one hand and a portion of the capital on the other. The respective share of interest and capital varies over time: at the beginning, mainly interest is reimbursed and at the end, almost only capital. A renegotiation is therefore a fortiori more interesting in its first half of life.

The renegotiation also involves a series of costs and disbursements which are likely to cancel the financial interest of the transaction.

The least expensive solution naturally consists in persuading his banker to replace the old loan, a less expensive loan or to modify his financial conditions by an amendment. But nothing obliges him to accept this request and most financial institutions are reluctant to this kind of renegotiation. It is therefore necessary to be persuasive and to assert your profile of “good customer” and the benefits that the bank can expect.

If this request is not successful, it is preferable to inquire with other banking establishments and financial organizations and in this case to carry out a credit repurchase. It consists of signing a new loan which will repay the existing one at a more advantageous rate.

  • However, it is more costly than a simple renegotiation
  • In addition, the change of bank requires the establishment of a new account with the various related costs, without forgetting the reconstruction of a relationship of trust and the subscription of other savings products and services.
  • It is also not recommended if you plan to resell the property in the near future (less than 2 years), as you would then return at the start of the loan cycle, when the loan costs the most.

You will often also have to pay your former banker the penalty for early repayment capped at six months of interest on the principal owed, within the limit of 3% of this same principal. But it is true that an increasing number of contracts now exclude any such penalty.

The law on savings and financial security of June 25, 1999 removed the penalty when the repayment is consecutive to certain events affecting the borrower or his spouse namely: change of place of professional activity, death or cessation forced professional activity.

This will also be the time to take stock of borrower insurance. And it is very likely that the death insurance you will need to purchase will be more expensive than five or ten years ago. Likewise, there is nothing to say that the coverage against unemployment will be so extensive. These are elements to take into account before embarking on a renegotiation.

 

Decision criteria

credit loan

Conclusion: the renegotiation of the loan is only valid financially if two conditions are met.

  • The differential rate between the old loan and the new one must be significant. At least one point …
  • Renegotiation should not occur too late in the repayment schedule.

As the simulations are fairly complex, it is better to ask the establishments contacted to provide a precise timetable accompanied by a precise amortization table.

 

Use of an intermediary to negotiate with several banks is recommended

credit loan

Last advice: if, after your calculations, you decide to send a renegotiation request to your banker, do not especially neglect the preparation of your file (salary slips, account statements, etc.). This must be done with the same thoroughness as when you took out your first loan.

The support of a broker is often decisive in these operations.

What is a loan in ROR.

The loan offers offered by banks are very diverse. Each bank can offer at least several options to borrow additional cash. However, the most commonly used product is the overdraft limit, ie the so-called ROR loan, available to virtually all bank customers.

 

What is this loan?

loan

A loan in the current account is simply a loan in the savings and checking account which we can use on the terms previously agreed with the bank. It gives the possibility of borrowing in the bank up to the agreed amount. Even if we see zero on our account, we can still use the cash up to the limit granted. In this way, we take out a loan, which we are obliged to repay within the prescribed period.

 

How to get it

apply loan

The most important criterion for obtaining a loan in a savings and checking account is having a personal account in a given bank for at least six months. Most banks after this period will agree to a loan in the current account. In addition, the personal account must be topped up with monthly salary payments. Based on the inflows to the account, the bank can assess what limit can be granted to us. This must be the amount that the borrower will be able to repay. The limit amount is granted individually. Usually, however, it is 6 or 8 times the salary that affects the account. A necessary condition is, of course, signing a contract with the bank for an account limit. It is a renewable limit, allocated for 12 months, but after this period it is possible to extend it for another year.

The big advantage of an overdraft facility is that interest is charged on the amount actually used, not on the amount of the limit granted. Because it is a revolving loan, after repayment we can use the allocated limit again. Banks charge a preparation fee, as well as a commission for granting and using a loan, a commission for increasing or renewing a loan for the next period, as well as fees related to loan collateral for considering the loan application. In addition, banks also offer credit insurance in the event of death, temporary incapacity for work, job loss or serious illness. However, there is no obligation to use these suggestions.

 

Which is better: loan or credit in ROR?

loan or credit in ROR?

The difference between a loan and an overdraft facility is that in the case of a limit, interest is charged only on the amount that will actually be used. So if we need additional finances for a specific purchase, it will be better to use the account limit, if of course it is enough. We can confidently use such a loan, we do not need to settle complicated formalities. However, easy access to cash also has its drawbacks and can cause debt repayment problems.

Which banks for an agricultural loan?

Are you planning to settle down as a breeder, viticulturalist or cultivator? If banks offer many financing solutions to support you in your installation, it is sometimes difficult to navigate. To find the right solution for your agricultural project, call on an agricultural loan broker. Note that AGEF Finance Courtage, professional credit broker in Rennes, Saint-Malo, Vitré, Vannes and Ploërmel, is at your disposal.

 

Farmers, how to finance your installation?

Farmers, how to finance your installation?

To finance the purchase of land or buildings, Fine Bank offers an installation program in six facets: professional offer, personal benefits, account management combined with real monitoring, tools for develop activity, anticipation of “hard knocks” and the means to exchange and share experience. Yes Mutual Credit, for its part, offers a solution for short-term liquidity needs. The Agridispo loan, considered as a cash advance, makes the link between expenditure and aid receivable. The release of funds is done in several installments, and the rate can be fixed or variable. Note that Happyhands Bank has a similar offer, called the AGRIFLEX Overdraft, intended to finance current cash needs or a specific and determined need.

 

What solutions for financing equipment?

farmer loan

Essential for running a farm, agricultural equipment can be financed in different ways depending on the banking establishment. For the purchase of new or used agricultural equipment, the loan from Yes Mutual Credit Actimat is offered by most equipment dealers. The entire purchase can thus be financed over several years, with a reimbursement delayed by a few months, the time to generate the fruits of its investment. 

 

Have you thought about subsidized agricultural loans?

Have you thought about subsidized agricultural loans?

State aid, subsidized loans have the main advantage of offering much lower rates than the average loan. In addition, the period of time before depreciation allows you to start more serenely. Agrinet Credit offers, for example, the subsidized regulated medium-term special young farmers loan (MTS-JA), granted as part of a Personalized Professionalization Plan. For a maximum of five years, the State pays part of the interest on the loan, and the interest rate on the MTS-JA loan is 1% or 2.5% during this period.

 

Trust the expertise of AGEF Finance Courtage

farm loan

Looking for an agricultural credit broker? Wondering which farmer’s best bank is and what rate you can get for your farm loan? With its experience and expertise, AGEF Finance Courtage, registered with the Arias as a Broker in banking operations, advises and supports you in your agricultural project. After analyzing your needs, we offer you suitable solutions. We also take care of the selection of the bank which meets your objectives and we negotiate the best conditions for you. Do you want your banking procedures to be made easier? So don’t wait any longer and come and meet us.

Repayment of the loan: what is important?

Done! You have received the requested loan and have thus fulfilled your wish. Now you can relax and enjoy your new achievement. However, you should not lose sight of the newly created liability. Because taking out a loan also creates an obligation to repay.

This requirement must be met on time. By any credit agreement you have to repay the personal loan obligation, according to a repayment term of 12, 24 or even 72 months.

 

Life is not always straightforward

loan repayment

It is important to remember that the budget review for your application was based on the credit rating information you submitted (monthly income, monthly expenses, etc.). This in accordance with the legal requirements. Naturally, this is just a snapshot of your financial situation. This can also change, for example through an unexpected bonus payment, a promotion and more wages or through unplanned offspring that increases your financial expenditure. Perhaps you will also reduce your employment or move to a less well-paid position.

Life is not always a straight freeway, sometimes it goes overland or up a pass road. In order to continue ensuring a smooth loan repayment, we have put together four tips for you.

 

These 4 tips lead to successful loan repayment

  1. Pay your loan installment using the payment slips prepared for you. So your payment can always be clearly assigned and there are no delays or ambiguities.
  2. Pay your loan installments on time. This way you avoid warnings that could be harmful to your future creditworthiness.
  3. If possible, pay more than a monthly installment. This saves you interest costs and can speed up the repayment considerably.
  4. If there is any problem with the payment of the loan or if you are unable to make the payment on time, inform your lender by phone. This way you avoid inconvenience such as a warning or, in the worst case, an enforcement.

 

Your behavior today will continue to have an impact

It is unmistakable: Your current payment behavior has an impact on your future. Regular payments without significant incidents lead on the one hand to the complete repayment of your debt within the planned loan term . Higher rates not only make you free of debt faster, you can also save interest costs. In addition, reliable payment behavior is rewarded for future loan applications and, depending on your financial situation, also enables you to apply for higher loan amounts.

How much does a loan cost in Switzerland?

Consumer loans are suitable for raising additional budget at short notice, for example to finance a desired project or further training or to increase the financial scope. Taking out a loan involves additional costs – how high it depends on the offer – and the differences are sometimes enormous. So what do borrowers have to watch out for to avoid unnecessary costs?

 

Consumer Loans – What Does the Law Say?

Consumer Loans - What Does the Law Say?

In Switzerland, the consumer credit law regulates the legal framework for private loans that are larger than $ 500 and smaller than $ 80,000. In addition to the content requirements for a credit contract or the rights and obligations of the contracting parties, it also specifies which interest rate is permissible for a consumer loan.

The effective annual interest rate for cash advances is currently set at a maximum of 10 percent. A maximum of 12 percent may be requested for overdrafts on credit cards. Initially, these interest rates are binding until the end of 2019.

 

Total cost of a loan – how are they made up?

Total cost of a loan - how are they made up?

The cost of a loan arising next to the APR of the loan amount and the repayment term. This three pieces of information can be used to easily determine the total cost to be paid back when taking out a loan.

While borrowers choose the amount and term themselves, the lender determines the APR. This is a personalized interest rate that is determined in a credit check, primarily based on the borrower’s credit rating.

Important to know: The annual percentage rate already takes into account all costs of the loan, such as processing fees. This standardization, which is required by law, makes it easy to compare different loan offers. In this way, consumers can use a credit comparison to identify the cheapest provider at a glance.

Interest rates for consumer loans are currently between 4.9 percent and 10 percent for most Swiss credit providers. At Agree Bank, top borrowers currently receive an interest rate of 3.5 percent, which is the most favorable rate in Switzerland. One quickly realizes that the choice of the provider can save several hundred dollars.

A cost example illustrates the potential. A consumer loan of over 30,000 dollars with a term of 24 months costs borrowers a total of 1,829 dollars with an effective interest rate of 5.9 percent. With the cheapest interest rate on Agree Bank of 3.5 percent, the interest costs for the same loan are only 1,088 dollars. This corresponds to savings of $ 741. So it’s worth comparing.

 

Term and loan amount – what should you watch out for?

Term and loan amount - what should you watch out for?

By choosing the term and amount, borrowers have an impact on the total cost of a loan. The following applies: the higher the amount borrowed, the higher the cost of the consumer loan. The same applies to the runtime. In order to save costs, it makes sense to choose both factors as low as possible.

However, one should not be guided solely by the costs when making the choice.

The loan amount should initially be based on the intended use. A car loan usually requires more money than buying new furniture. If the exact costs are already known, the loan should be applied for at least this amount.

Borrowers often make the mistake of not planning enough financial leeway. Especially with low monthly incomes, it makes sense to avoid financial bottlenecks during the loan term by taking up a higher loan amount.

The same applies to the choice of the term. Many borrowers are tempted to choose these as small as possible in order to save costs.

However, a shorter term leads to higher rates for the same amount. Another example to clarify: While the monthly repayment for a loan of over 30,000 dollars with a term of 36 months and interest of 3.5 percent is just under 880 dollars, this amount increases to over 2500 with a term of only 12 months dollars a month. Depending on the monthly income, the financial scope in this case decreases drastically.

For this reason, borrowers should think carefully about the financial scope they need during the term of the loan, take into account further planned and unforeseen costs and choose the loan amount and term accordingly.

We at Agree Bank would like to offer our borrowers an individually tailored loan at the most favorable terms. The Agree Bank team is always available to help and answer any questions you may have. So please feel free to contact us.