Refinancing a consumer loan - concluding a deal with a new bank to receive funds to pay off old debts. The new agreement allows to reduce the financial burden, the amount of overpayments, and increase the loan terms
Loan refinancing - repeated lending to pay off previously received debt. It is convenient if you need to increase the terms of payments, to combine loans taken from several banks into one. The borrower has the opportunity to save a significant amount of money by reducing the amount of monthly payments. Unlike restructuring, it involves contacting a new bank to receive funds.
Pros and cons
Almost all banks offer to use consumer loan refinancing. They have an opportunity to attract new customers. The subject receives favorable conditions for making payments. There is a chance for a person to choose a financial institution on the best terms.
Refinancing can reduce the amount of payments in case of loss of work, decrease in income, or the appearance of a child. Re-crediting allows you to extend the repayment period, reducing the financial burden on an individual or family.
Another advantage is the ability to remove the encumbrance from the pledge. It is required when concluding a contract for a large amount. After the conclusion of a new agreement, the property becomes your property, a regular loan is issued.
The disadvantages include:
- the need to re-prepare documents to obtain approval;
- some organizations set rates that, taking into account payments on commissions, turn out to be unprofitable;
- refinancing can only be used by certain groups of borrowers (not overdue, with a good credit history).
How to use refinancing?
First, choose a bank that can act as a new lender. Notify him of your desire to go through the refinancing procedure. In order for a financial institution to make a final decision, you need to provide documents:
- declarations and certificates of income;
- information about dependents;
- information about the property.
Other documents may be required, determined by the rules of the bank. The minimum amount of income in the 2-NDFL certificate must be at least the minimum subsistence level. If there are doubts about solvency, then there is a high probability of getting a refusal. The loan application is considered within 5-7 working days. If the decision is positive, a new loan is issued.
Features of refinancing consumer loans
You can use the service only after at least three months from the date of the first contract. During this time, it is necessary to timely deposit funds for the loan body and interest.
Banks are more willing to agree to conclude a new agreement if the amount of the debt is at least 500 thousand rubles, and before the end of payments, at least 7 months. Otherwise, the financial institution loses its benefits.
In conclusion, we note that refinancing a consumer loan is beneficial when it comes to large amounts. The interest rate cut is 1-3%, but it may be necessary to pay a commission for premature closure of an account with the first bank.
