Why does a car owner want to reschedule his car loan? The problem of debt restructuring arises when the owner of the old car, which is still being financed, wants to part with it. A new car is supposed to replace the old one. However, if the sale of the old car does not bring in so much that it can be used to pay off the current loan, this is referred to as a debt rescheduling. The remaining loan amount of the old car is therefore included in the new financing. alllondonhotels.net for a critique
The benefit is not only reflected in owning a new car, it can also change interest rates, the monthly charge and the term. If the old car is sold privately, the customer can still dispose of the sales amount. In the event of a trade-in, the proceeds will be offset against the new loan. As a rule, however, a car loan rescheduling does not prove to be of benefit to the borrower, since the vehicle value does not reach the amount of the loan.
What are the disadvantages of rescheduling a car loan?
If the borrower later has another wish to own a new car, he will try to compensate the old loan by paying in the old car.
This will no longer work because the transfer fee has now reached a level that is disproportionate to the old vehicle value. It looks even worse with a possible total loss. The insurance then pays at most the residual value of the old car. However, this residual value is in any case much lower than the normal sales value before the total loss. In many cases, this fact leaves a not necessarily small mountain of debt for the borrower, since most car banks require the old loan to be repaid when the car no longer exists.
Can it not save interest on a car loan debt rescheduling?
Unfortunately, the greed for a new car blinds many. You spontaneously take out the best loan for the new car without checking the conditions of other lenders. Only in the course of time is it then determined that there are also much more favorable terms for financing. In order to save money afterwards, you want to reschedule the car loan. In the event of early redemption, the paid processing fees are often lost, after all, only one thing is to be achieved with the debt rescheduling:
Lower credit costs, a possible extension of the term, as well as a reduction in the monthly payment. However, this option is usually associated with higher costs.