When can the rate of a loan be defined as usurer?

Whenever there is a need to apply for a mortgage or a loan, the greatest fear is linked to interest rates and how much the capital initially requested will be transformed (see also I need money).
There are banks and credit institutions that have taken advantage of the situation to significantly increase rates, even at the limit of the usury threshold.

The interest rate limits established quarterly by law

The interest rate limits established quarterly by law

To avoid that interest rates become too high and therefore unsustainable for citizens, limits are set so that they do not strain in the field of usury.
Each quarter, the Bank of Italy calculates the average global effective rates applied at a financial level according to the loan/mortgage category. By increasing these values ​​by 25% and adding a further 4 percentage points, the wear rate for that type is reached. In any case, the delta between the average overall effective rate and the usury rate cannot exceed 8 percentage points.

For the current quarter (from 1 October to 31 December 2015) the limit rates are summarized in this table:

Some useful tips

Some useful tips

First of all, pay close attention and read in detail the contract of your loans or mortgages to verify that it is in accordance with the law.
Considering that, often and willingly, contracts of this type are not easy to understand, it is recommended that you get help from a consumer protection association, so that they explain in detail the items that are not clear

If there is actually a level of interest above the limits, you have two ways. The first is to make an expert report to the companies/companies that offer this type of service. Be careful to rely on these companies, as working on large numbers and making money on time they tend to make money by making the paperwork go long.
Personally I believe that the second way, that is to turn to professionals, is the most effective.

Know that if the use by the bank of usury rates is recognized in the legal seat, you will have a lower interest (therefore the loan cannot be considered void). To this must then be added the amount to be paid for damage.

Loans and Mortgages: how to request a quote?

 

When a credit broker evolves his professionalism and experience to become a credit specialist, among the possibilities that arise in his career there is that of being part of complex bodies, real “providers” that provide services in this sense.

This is what happened in the case of the “Fine Bank”, a center for aggregating credit mediation that aims to satisfy any customer need in relation to mortgages, personal loans, assignment of the fifth (see also How to renew the assignment of the fifth). The headquarters are in the province of Savona (in Genoa there are qualified brokers located throughout Italy, also in Salerno, in Piglia, Sicily, etc.), while other offices are in Milan and near Naples. Let’s see what it is.

Credit brokerage for customer service

Credit brokerage for customer service

Founded in 2005 by the merger of two companies, Across Lender and Spin Lender, with the involvement in 2013 of the holding company Lite Lender Company, in reality the Fine Bank Group can count on personalities with 25 years of experience behind them. In order to give greater clarity and coherence to the project, four divisions are therefore created: insurance, companies, mortgages, loans and assignments of pensions and salaries.

How to request a free online consultation

How to request a free online consultation

In practice, by completing an online form on the website Fine Bank or by calling, the customer can choose the service on which to request advice, identifying the most suitable products at personalized and advantageous prices.

This applies to mortgages (and services such as mortgage replacement, online mortgages, subrogations, etc.), for personal loans (to understand how much you can ask banks for your needs), for insurance (life, home, fire, civil liability, disability) and for the transfer of the fifth and salary proxies (in order to find out how much to be able to retain).

Among the flagships also mentioned by the reviews made on Fine Bank, however, there is above all the loan and advice to companies. Whether for mortgages (in the case of a variable rate, the installment will be equal to the value of the Euribor rate plus the spread), mortgages, unsecured, leasing (see also Car leasing) or other products, there is always a consultant who can give the right advice to interested entrepreneurs.

In addition, each section presents truly complete subsections online with information on all the details that may concern certain topics. Finally, Fine Bank has also recently added the new Allea-Re project to these services, a sort of package of services dedicated to real estate agents to be closer to customers.

Construction finance despite existing loans.

Sometimes several payments are due at the same time and you temporarily have a financial bottleneck. In such a case, relatives or friends can usually help out. However, it is not always possible to request money from friends or relatives. And a normal bank would immediately reject any loan application due to a Credit Bureau entry or poor credit rating. However, this does not have to mean that you now have to bury your financing wishes. A borrower has real chances to get a loan even without Credit Bureau information or with poor creditworthiness.

Mortgage lending Despite existing loans – what you should consider

Mortgage lending Despite existing loans - what you should consider

It is crucial for you as a borrower that the repayment rates for your loan are as low as possible. So do not expect more than your current financial circumstances allow. Favorable interest rates and good conditions are essential for financing. Many customers want the most flexible loan possible. The possibility to suspend payment in installments for a month is just as much a part of this as free special repayments. If all of this is true, one can rightly speak of good financing on the subject of construction finance despite existing loans.

However, note a few things so that there are no obstacles to your financing as an unemployed person, trainee, employee, pensioner, self-employed or student:

1. Do not borrow more money than is really necessary

In general, the necessary funds should be overestimated as precisely as possible with a view to the subject of mortgage lending despite existing loans. If you have an overview of your expenses beforehand, you will not experience any unpleasant surprises afterwards and can always pay your installments on time. It would certainly be wise to plan a small financial cushion. However, this buffer should not be too large, since otherwise the liabilities would become unnecessarily high. Therefore, it is reasonable not to borrow more than is needed. If the need for funds has really been underestimated, you can easily compensate with follow-up financing in the form of follow-up or top-up financing.

2. Establish and structure a financing plan

The top priority for a planned project is to realistically assess your financial situation and then calculate the amount of the loan. This does not particularly apply to the topic of mortgage lending despite existing loans. For example, writing down all expenses every week is excellent: How much money is spent every day on what things? So that no hidden amounts are overlooked, small expenses, such as standing coffee at the bakery or beer after work, should also be taken into account. This has the advantage that, on the one hand, it can be determined where there is still potential for savings and, on the other hand, the correct repayment rate can be estimated fairly precisely.

3. Value care and accuracy

All information about your creditworthiness and your own financial situation must be correct, honest and careful – especially when it comes to mortgage lending Despite existing loans, with all information about your creditworthiness and your own financial situation carefully, honestly and precisely. You should allow yourself enough time to carefully compile all documents and evidence. Through the complete and honest presentation of your finances, you convey a serious picture of yourself, which always has a positive effect on your chances for an express or instant loan.

A good mediator can do a lot for you

In principle, the main activity of an intermediary is to support you in the search for a suitable “loan without Credit Bureau”. The assistance does not, however, extend solely to mediation. In some cases, it also includes detailed debt advice. If you want advice on a financing offer or need help in compiling the documents for the loan despite Credit Bureau application, an experienced broker is of course there for you.

Advantages or disadvantages of loan brokerage

Advantages or disadvantages of loan brokerage

Advantages:

  • Contacts with lesser known financial institutions and banks
  • Detailed advice before submitting the application
  • Mediation of loans even with insufficient creditworthiness
  • Help with compiling the documents for the loan application
  • Reasoning aid for large amounts of funding or difficult personal circumstances
  • Good options on cheap loan interest

Disadvantage:

  • Dubious offers are not always immediately recognizable
  • Risk of obtaining expensive loans
  • Possible costs of obtaining credit

The contribution credit without Credit Bureau Magdeburg is also worth reading

Based on the good business relationships that many intermediaries have with small banks, there are good chances of getting more effective terms for mortgage lending despite existing loans. It is entirely possible to negotiate even in difficult circumstances. Because of their good connections, they can explain negative Credit Bureau entries, for example, so that they are not rated as strongly in the creditworthiness check as in the automated processes of large banks. Such an application for a mortgage loan Despite existing loans, there would be absolutely no chances with a normal bank.

How to recognize reputable and dubious credit intermediaries

When it comes to home finance Despite existing loans, a reputable broker will always represent your interests. He generally does not charge you any fees or advance payments for his services because he receives his commission from the bank.

The following applies to reputable credit brokers:

  • There are no costs for arranging financing
  • The company has a website with address, imprint and contact options
  • When you call, the office is de facto reachable and {the person making the conversation partner} gives a competent impression
  • You will receive specific information on target and effective interest rates, terms and loan amount

This is how you recognize a dubious mediator

  • Dispatch of the application documents by cash on delivery
  • Offers in the form of a financial restructuring
  • Unsolicited acquisition at home
  • The charging of a fee regardless of the conclusion of the contract, but only for the consultation
  • The loan is promised to you one hundred percent in advance
  • Financing depends on taking out residual debt insurance
  • Calculation of expenses or additional costs
  • The broker only takes action if you sign a brokerage contract

Why foreign banks are good alternatives when it comes to mortgage lending despite existing loans

Whether for a new car, a long trip, a better mobile phone or the start-up capital for starting a business – loans from foreign financial institutions have long ceased to be a financing option that you have to keep your hands off. In addition to the traditional way to the house bank on the corner, consumers have now also discovered the Internet to take out a loan from a foreign bank that exactly meets their needs. What speaks for a credit institution abroad are the much simpler lending guidelines compared to Germany. Therefore, an insufficient creditworthiness or a negative Credit Bureau entry when it comes to mortgage financing play only a minor role despite existing loans. In principle, it is Infra banks that finance loans that are brokered online. This could be an interesting alternative for consumers who need an injection of money particularly quickly but have already been rejected by a Cream bank. This includes, for example, the self-employed, students, trainees, pensioners, probationary workers or the unemployed. It is obvious that this group of people in particular has an extremely difficult time with regard to mortgage lending despite existing loans.

Why a Swiss loan is a good option

Why a Swiss loan is a good option

It is often difficult for a private individual who is in financial need to get a loan. It is especially the people with bad credit or debts who need money most. In these cases, a so-called “Swiss loan” can be a sensible alternative. This is to be understood as a loan that a Swiss financial service provider issues. A negative Credit Bureau entry is irrelevant for these banks because there is generally no such request, which makes it easier to find a loan. With regard to the topic of mortgage lending Despite existing loans, this fact can almost be described as ideal.

Clearly you also need certain proof of income and collateral for a loan from Infra banks, although a credit check is also mandatory before the loan is granted. If your only problem is the Credit Bureau entry, but your credit rating is in the green range, the Swiss loan for mortgage lending would be a realistic option despite existing loans.

This is how building finance works with certainty despite existing loans

This is how building finance works with certainty despite existing loans

In the event that you are looking for mortgage lending despite existing loans, you are probably thinking of a “loan despite Credit Bureau” or “despite a moderate credit rating”. If Credit Bureau does not provide information on the economic situation of the applicant, then well-known credit providers will definitely turn to other credit agencies.

Credit Bureau is by far the largest and best known credit agency in Germany. Accordingly, almost everyone has a scoring with her. If you are a credit card holder or have set up a bank account, such a credit rating has already been created for you. You don’t get a “loan without Credit Bureau” at a reputable bank. In principle, only a “loan despite Credit Bureau entry” is possible. Very few consumers have a “negative Credit Bureau entry”, although many mistakenly think so. In fact, the scoring of the vast majority of people at the credit agency is consistently positive

Sometimes you want to find out whether your loan application has any chance of being approved. Then it is best to determine in advance whether you really have as negative a credit rating as you think. Incidentally, you can conduct a fee-free query of the “Credit Bureau Score” once a year at Credit Bureau. Since 2010, it has been possible to obtain so-called self-disclosure to determine what information is stored with the credit agency. In principle, you are entitled to this information once a year free of charge in accordance with Section 34 of the Federal Data Protection Act (BDSG). You can request your own scoring (Credit Bureau score) as well as information about whether any institute has made an inquiry about you in the past few months at “MeineCredit Bureau”. Your score depends on various “ratings”. These ratings can range from 1 to 100. In the event that someone has a score of 100, this means that an extremely low probability of failure is expected. On the other hand, if someone only has a value of 50, for example, Credit Bureau suspects that payment defaults may occur.

Tip: This is how you can have a negative Credit Bureau entry deleted

It has certainly happened to everyone that they did not pay an invoice on time. There can be various reasons for this: you have a new postal address due to a move, were on vacation at the time or were currently in a financial bottleneck. Even an open cell phone bill can sooner or later lead to problems. It happens faster than you think. The result is that you get a disadvantageous Credit Bureau entry and then it is difficult to get a loan. A reduction in the score index through several reminders means that it can have consequences for the application for a loan.

However, it is possible that the consumer can have an unfavorable entry deleted at Credit Bureau. It is not uncommon for the data stored at the credit agency to be out of date and therefore outdated or simply wrong. Therefore, exercise your right as a consumer and request self-disclosure in order to be able to view your saved entries. To do this, it is sufficient to request a deletion from the credit agency. The condition for removal is that the due invoice has been paid within 6 weeks and does not exceed USD 2,000.

Your data at Credit Bureau – deletion of Credit Bureau data

Even without your intervention, the data at Credit Bureau will be automatically removed after a certain time. This usually happens:

  • after 12 months for information about inquiries; This information is only passed on to Credit Bureau contract partners within ten days
  • for loans to the day, 36 months after the year in which the loan was repaid in full
  • in the case of reports on outstanding claims, each after a period of three full calendar years (that is, at the end of December 31 of the third calendar year that follows the entry)
  • for claims from online shops or mail order companies, provided that these have now been resolved

Swiss credit – the advantages

When it comes to obtaining a loan, it is often difficult for private individuals in a financial emergency. The explanation: The chances of financing decrease significantly with poor creditworthiness or debt. In such a case, a so-called “Swiss loan” would be a real alternative. This is a loan that is granted by a Infra bank. Credit Bureau queries are generally not carried out by such institutions, which makes it considerably easier to obtain the loan. Regarding the topic of mortgage lending Despite existing loans, this fact can almost be described as ideal.

Obtaining a loan without checking the creditworthiness as well as various proof of income and collateral is logically not possible even with Swiss financial service providers. If it is only the Credit Bureau entry that worries you about the financing, the Swiss loan could be a real option for you, provided that your credit rating is so far in the green.

What is the “APR”

For construction finance Despite existing loans, the amount of the loan costs is also decisive. The “effective annual interest rate” or “effective annual interest rate” plays an important role. For the cost of a loan, the “effective annual interest rate” is used, always referring to the nominal loan amount. As a percentage, it is always dependent on the payout. For loans whose interest or other price-related criteria can change during the term of the loan, this interest rate is referred to as the initial “annual percentage rate”

Sometimes, a fixed borrowing rate is set for a loan for the entire term. In plain language, this means that the nominal interest on which the “loan” is based remains unchanged, regardless of the current trend on the capital markets. A fixed borrowing rate provides you as a credit customer with the necessary planning security. So you can be sure that the interest rate on the “loan amount” will not change during the entire term.

What does the loan term mean

What does the loan term mean

The respective loan terms that are granted to the borrower have an enormous influence on the loan term of a loan. In other words, the borrower has to pay smaller monthly installments if the “loan term” is longer than if he chooses a short-term loan. As far as the loan term is concerned, it can definitely be worthwhile to think through the various options. However, it is not possible to use all maturities for all loans.

The loan term, which is also referred to as the loan term, is the period from the payment to the complete payment or repayment of the loan amount. In principle, it is the repayment and the amount of the nominal interest that play an important role for the duration. Accordingly, the amount and number of installments are important for the term. If the repayment amount is relatively low, it clearly takes a comparatively long time to fully pay the loan and thus the loan amount including processing fees and interest. If loans run for more than 120 months or longer, they are called long-term loans.

What are loan fees

What are loan fees

Loan fees as a whole include the processing commission, loan processing fees, transaction fee and the processing fees. Until 2014, financial institutions were allowed to officially charge the applicant the effort incurred for a loan request or processing the loan application. The calculation of the “loan fees” for processing a loan request, together with the evaluation of the borrower’s creditworthiness, was declared illegal in May 2014. In detail, this means that fees for processing a loan application (on average 1 – 3 percent of the loan amount) may no longer be required since 2014. Often the fees already paid for the loan application or the credit request can be requested back.

What is a lender

The lender can act as a company or as a private individual. He grants a loan to the borrower or borrower for a certain period of time at an appropriate interest rate. The loan agreements usually refer to the “lender”, although terms such as expressions are also common names.

A loan carries a high risk of default for the lender, which means that a higher interest rate is predominantly required. Lenders are usually financial institutions such as building societies, insurance companies or credit banks. The BGB (Civil Code) regulates the borrower’s rights and obligations.

What is the monthly rate

Financing such as “loans with poor credit ratings” is also paid in the form of individual monthly installments. The interest rate is a significant element in the monthly rate. This interest rate is based on the currently applicable, typical market prices for which the financial institution procures money itself on the global capital market. Your customers later pay this interest plus a reasonable surcharge for their loan.

Another important component in the “monthly installment” of loans is the amount of the repayment. The borrower normally determines the repayment rate depending on his economic circumstances. For {long-term financing contracts}, the repayment is usually 1 {{percent}} per year. If the borrower intends to repay the loan amount and thus the loan amount in a shorter period of time, he must negotiate a higher repayment with the bank. The monthly charge is then of course significantly increased in line with the amount of the repayment.

Repayment and interest rate are thus the common criteria that determine the monthly rate for loans. The processing fee of the banks and brokerage commissions of the credit intermediaries are not infrequently included in the monthly installment, very often included in the monthly installment. Normally, these costs are already included in the interest, on the other hand, they are part of the total monthly loan.

What is a debt rescheduling loan

A debt rescheduling loan is a loan that someone takes out in order to use the money to pay an existing loan with high interest rates a little cheaper. With this debt rescheduling, the borrower can save cash. Among other things, various loans can be merged into a single loan. As a result, you can disclose more than one loan for debt rescheduling. Of course, for a “debt rescheduling loan” you do not go back to the financial institution where you took out the first loan, but to another. However, there is no reason not to apply for the loan for a debt rescheduling from the same bank – clearly only if the conditions are right this time.

The real benefit of rescheduling is that after you take out your new loan, you have a smaller financial burden than before – hence the debt rescheduling loan. Even if the interest is only marginally cheaper, it can mean that you will ultimately save a lot of money.

What is the total loan amount

The total loan amount includes all additional costs that the customer has to repay for a loan to the financing bank. Consequently, this is not just the amount of the loan taken out, but the total amount that the customer repays to the financial service provider during the repayment within the term of the loan. The additional costs that are added to the requested loan amount include, among other things, possibly commissions or processing fees as well as the interest to be paid. The difference between the total amount of the loan and the nominal amount of the loan is therefore the result of the additional fees and expenses.

The costs for taking out residual debt insurance in connection with the borrowing also count towards the total loan amount.

What is the loan amount

What is the loan amount

As far as the actual loan amount, which is paid out to the borrower after approval of the loan application by the credit institution, is of course lower than the total loan amount. The amount of the payout may also differ because the “loan amount” may not be paid out in full as a total amount. The same applies to a loan or a “Swiss loan”.

When a financing application is made for a loan amount, the bank checks the current earnings situation for a commercial borrower and the total available income for a private person. The actual amount of the loan amount is irrelevant. The borrower’s monthly earnings are checked for a loan amount of USD 300.00 as is the case for a loan amount of USD 100,000.00.

There is usually a fixed agreement for the repayment of the monthly installment for the loan amount within a certain period. These agreements are laid down in the loan agreement without exception. Regardless of this, the borrower often has the option of repaying the loan amount faster with special repayments if they have the appropriate income.

Such special repayments are not always free of charge. If you are interested, you only need to look at the respective financing offer. Once the last installment for the loan amount has been paid, the contractual relationship automatically expires. When applying for a loan again, the borrower must in turn submit a written application to the bank.

What are the credit rating criteria

Without a credit check, there is no loan. On the basis of the result of the credit check, the credit rating is made, which in turn depends primarily on the “credit rating criteria”. From this, the respective premiums on the loan are then determined. If the credit rating is positive, the loan interest is favorable.

If the various criteria of the credit check provide a good result, it is undoubtedly very advantageous for the borrower. The usual creditworthiness criteria of financial institutions often differ from bank to bank. In contrast, there are no differences between the individual banks in the following creditworthiness criteria. Also, all of the listed factors are the same for every borrower.

  • What is the monthly earnings?
  • What is the employment relationship like?
  • Is the borrower an official, a contract agent, or a manager?
  • Who’s the employer?
  • Where is the applicant’s place of residence?
  • Are there entries at Credit Bureau or other credit bureaus?
  • Does the borrower keep a household book with an input-expenditure account?
  • Are there assets in the form of buildings or land?
  • What is the marital status?
  • Are there existing payment obligations and guarantees?

These are the prerequisites for mortgage lending despite existing loans

If you want to apply for a loan from a loan broker, some criteria have to be met. Amongst other things:

  • Legal age
  • German place of residence
  • Account with a domestic financial institution
  • regular income
  • sufficient creditworthiness
  • for earmarked financing, collateral such as real estate or a car

A so-called credit private or personal loan, which various credit intermediaries have in the program, can usually also be obtained with a poor credit rating. On the other hand, “borrowing money without Credit Bureau” does not go through a conventional bank. Instead, one or more private individuals appear as lenders in this case.

“Building finance despite existing loans” – good information

Think carefully about whether you are really able to repay a loan with a negative Credit Bureau or a bad Credit Bureau score without major problems. Because when the financial institution rejects a loan application, this is usually not unfounded.

Please consider the following: One of the business criteria of the lending banks is based on the fact that as many consumers as possible take out a loan and repay it on time, in full and with interest. There is always great interest on the part of financial institutions to award financing. In the past, the payment behavior was very inadequate, one must expect that no timely repayment will continue to take place. Therefore, the application will then be clearly rejected. Another reason for rejecting the loan application is not infrequently that the minimum income available is not too low to be able to repay the loan.

So before you apply for a “loan without Credit Bureau” or other financing, you should compare your total income with the expenses as realistically as possible. This makes it easy for you to assess whether you may have difficulties with repayment at a later date. Keep in mind that there can always be something unforeseen financially, which makes it a problem or almost impossible for you to pay back the loan amount conscientiously. This could be, for example, a defective refrigerator, the defective car or a high payment request from the tax office.

There is the possibility of competent personal advice on a “loan with Credit Bureau entry”, from an experienced credit advisor. This not only supports you in finding the right offer, but also evaluates your current financial status together with you. In this way, you don’t get caught in a debt trap unnecessarily, which can easily happen with a reckless “taking out a loan despite Credit Bureau”. One of the most popular among borrowers is “debt restructuring despite Credit Bureau”. The loan broker is also an expert in this area and can contribute the right recommendations and tips when it comes to combining different loans.

Renegotiating a Loan: real regulatory holes on some categories of them

The loans include many types of products even if in the Italian legal system in some cases there are real regulatory holes on some categories of them. A problem that we feel especially in certain areas such as when we are called to renegotiate a loan or a mortgage. This happens because the legislator has disciplined the renegotiation of mortgages, establishing the modalities, but at the same time has kept the bank’s discretion in merit high especially for some forms of personal loans.

On the contrary, going even deeper we see that only a specific discipline with limits and methods of accessing it is given to disposals. So we must first make the distinction between a general personal loan and a assignment of the fifth, and see how to achieve the goal of renegotiation.

Limits for the renegotiation

Limits for the renegotiation

Regardless of the lending institution (and also in the case of multi-year Inpdap loans), it is possible to renegotiate the loan against assignment of the fifth only if it passes through the renewal. This in turn is only possible if these conditions are met:

  • an assignment of the fifth with a maximum duration of 60 months was made, regardless of the number of installments that has been repaid, a renewal and therefore a renegotiation can only be requested if you opt for a 10-year assignment;
  • a sale for a duration of more than 60 months has been stipulated, for which there is the possibility of renewal and therefore renegotiation only if at least 40% of the current installments have been repaid.

There are no other possibilities of derogation from these conditions, even if more liquidity may be required in the renewal.

Restrictions on renegotiation of personal loan

Restrictions on renegotiation of personal loan

We reiterate again: there is no possibility of renegotiating a personal loan. Not only that, if banks do not find the operation convenient, not being obliged by law to consider a request for renegotiation, they can refuse to enter into any negotiations. Furthermore, even if the possibility of renegotiating the original conditions is taken into consideration, the problem remains with the management of the original contract. In this case, in fact, it will not be sufficient that contractual changes are reported, such as a rate change or an extension of the duration to make the installment easier to repay.

For this kind of changes, the stipulation of a new contract is required, which never happens at zero cost, since both the extinction penalties and the possible costs of the same extinction count are foreseen. In addition, the new loan agreement will normally also recalculate the preliminary costs of the new file.

So you have two possibilities to be able to proceed with an operation with which to renegotiate a personal loan, trying to exploit the aspect of economic convenience, regardless of whether it was granted by a financial company.

  • debt consolidation;
  • the request for new liquidity.

Potential of debt or loan consolidation

Potential of debt or loan consolidation

The consolidation operation has an essential, indispensable and mandatory requirement: at least two loans must be included in the same loan. In this way, the previous loans are extinguished and the conditions are completely new for them, such as rates and duration. The goal is to achieve savings and greater sustainability of the installment, so even if we are not talking about a real renegotiation it is a good way to achieve similar objectives.

How to overcome the limit on personal loans

How to overcome the limit on personal loans

If you have a personal loan but it is not a transfer of the fifth, you therefore have no tools available to push a bank to take into real consideration our willingness to renegotiate the loan.

But what to do in the case of a loan, stipulated perhaps only a year before, for which, with a renegotiation, we would obtain a good saving, which, however, would also represent a fair renunciation for the bank? The only viable hypothesis is to ask for an increase in liquidity, even a modest one. What does it mean?

Let’s see a practical example. For example, we asked for a personal loan of 10,000 USD to buy a used car at the rate of 10%. After one year the same bank offers a 7% rate for the same sum. The only possibility we have of lowering the rate on the current loan is to ask the bank for additional liquidity, let’s say another 2 thousand USD. The situation in this regard could be the following:

  • on the initial loan we would have an installment of approximately 212 USD with a duration of 5 years (with interest on maturity equal to approximately 2748 USD);
  • at the end of the first 12 months we would have repaid around 1600 USD, with a residual capital of around 8400 USD.

By asking for new liquidity of 2 thousand USD, we would again be around 10 thousand USD, or rather 10400, which at the rate of 7% would lead to the following situation:

  • installment of 205 USD always over 5 years of repayment;
  • interest on the maturity of 1955 USD.

If we add up the total interest already paid of around 926 USD for the first year, and the standard 1% penalty of 1000 USD, we will therefore pay a total interest of 3880. If instead we had chosen a loan that has not penalty of extinction then the total disbursement will be 2880 USD. So an operation of this type is worthwhile only if there are no extinction penalties to pay, otherwise many more interests are ‘accrued’, enjoying a limited increase in liquidity.

Conclusions

In order to overcome these difficulties, some banks have made their loans more flexible, which allows the duration of the loan to be reviewed and extended. But this is not a form of renegotiation, precisely because the contractual conditions are not affected, but the options already provided are exercised. Finally, it should be emphasized that renegotiation is not always convenient, as demonstrated by the example given above. You must always start from calculations and comparisons on real data, also using independent calculation tools.