What is debt restructuring?
Table of Contents
- 1 What is debt restructuring?
- 2 The early repayment penalty
- 3 When is refinancing worthwhile?
- 4 Refinance your loan in just 4 steps
- 5 Two strong partners at your side: ADAC and Bank11
- 6 *Conditions
- 7 Frequently asked questions about debt restructuring
- 8 The ADAC Autokredit awards
- 9 A certain percentage of the remaining loan balance.
One Debt restructuringalso Loan refinancing or Refinancing offers the possibility of reducing the costs of an existing loan or several existing loans. The old loan is replaced by a new one. The aim is usually to cheaper interest rates to benefit or the monthly installments The borrower takes out a new loan in the amount of the outstanding debt in order to pay off the old loan in full. However, the bank or credit institution may require a compensation payment, the so-called Prepayment penaltymay arise.
Repay your loan now¹
The early repayment penalty
Die Prepayment penalty is a fee that banks or credit institutions charge when a borrower repays his loan early. It is due because the lender suffers interest losses due to the early repayment, which he wants to compensate with this fee. The amount of the early repayment penalty is, however, capped by law and may not exceed 1 percent of the remaining debt If the loan only has less than a year to run, it is only 0.5 percent.
When is refinancing worthwhile?
One Refinancing is worthwhile if the Total cost of the new loan lower are the sum of the remaining outstanding debt, the interest and the prepayment penalty of the existing loan. If the monthly rate remains the same, the interest savings shorten the term of the loan, which further reduces the overall costs. The greater the difference between the interest rates, the higher the savings potential. If the original term of the loan is maintained, the monthly rate decreases. Alternatively, the term can be extended if necessary to create financial flexibility. By refinancing, borrowers also have the chance to benefit from more favorable conditions, such as higher special repayment options or the possibility of early full repayment free of charge.
An example of a worthwhile loan repayment:
For a loan with €18,000 remaining debt and 60 months remaining term
| Alt-Credit | Refinancing ADAC car loan |
|---|---|
Refinance your loan in just 4 steps
1. Contact the existing loan provider:
- Determine the redemption amount for your vehicle
- Inquire about conditions for early redemption
- Inquire about current outstanding debts
2. Conclude a new loan agreement
3. Termination of the old loan
- Check contractual termination clauses and observe deadlines
- Terminate existing loan agreement
4. Transfer the remaining amount using the new loan
- Pay off new loan in installments as usual
Repay your loan now¹
Two strong partners at your side: ADAC and Bank11
*Conditions
Representative financing example according to Section 17 Paragraph 4 PAngV: Net loan amount 10,000 euros; contract term 60 months; effective annual interest rate 5.99%, fixed interest rate 5.83% pa; 60 monthly installments of 192.55 euros each; total amount 11,552.80 euros. The lender is Bank11 für Privatkunden und Handel GmbH, Hammer Landstraße 91, 41460 Neuss. After the contract has been concluded, the borrowers have a statutory right of withdrawal. Creditworthiness required.
Frequently asked questions about debt restructuring
What does refinancing a loan mean?
Refinancing a loan means replacing an existing loan with a new one with better conditions, such as lower interest rates or a longer term. The aim is to reduce the monthly installments or save costs overall.
When can you refinance a loan?
As a rule, you can refinance a loan at any time. In most cases, you can expect a notice period of one month.
How useful is debt restructuring?
Refinancing makes sense if the new loan offers significantly lower interest rates or reduces the monthly payment, so that you save money in the long term. However, it is only worthwhile if the savings exceed the potential costs of repaying the old loan.
How high is the early repayment penalty?
The amount of the prepayment penalty may not exceed 1 percent of the remaining debt. If the loan has less than a year left to run, it is only 0.5 percent.
The ADAC Autokredit awards
ADAC car loan awarded by €uro am Sonntag (issue 08/2024) for the best offer.
ADAC car loan awarded by €uro am Sonntag (issue 08/2024) for top price/performance.
ADAC Autokredit awarded by Handelsblatt (03.06.2024) with the grade “very good” in the category “independent of creditworthiness”.
¹ You will be taken to the online form of our cooperation partner, Bank11 für Privatkunden und Handel GmbH, to complete your desired application.
A certain percentage of the remaining loan balance.
Debt Restructuring: A Comprehensive Guide to Refinancing Your Loan
Are you tired of paying high-interest rates on your existing loan? Do you want to reduce your monthly installments and save money on interest payments? Debt restructuring, also known as loan refinancing, may be the solution you’re looking for. In this article, we’ll delve into the world of debt restructuring, explaining what it is, how it works, and when it’s worthwhile.
What is Debt Restructuring?
Debt restructuring, also known as loan refinancing, is the process of replacing an existing loan with a new one. The goal is to reduce the costs of the original loan by taking advantage of lower interest rates, lower monthly installments, or more favorable loan terms. The borrower takes out a new loan in the amount of the outstanding debt to pay off the old loan in full. However, the bank or credit institution may require a compensation payment, known as the prepayment penalty.
The Early Repayment Penalty
The prepayment penalty is a fee that banks or credit institutions charge when a borrower repays their loan early. It’s due because the lender suffers interest losses due to the early repayment, which they want to compensate with this fee. The amount of the early repayment penalty is capped by law and may not exceed