Every borrower wants to pay off their debt faster or at least reduce the interest rate on it. There is such a loan refinancing program.

What it is

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Due to the difficult economic situation in the country, some borrowers became temporarily insolvent.

Banks and lenders lost their funds as citizens were unable to repay their loans.

And some individuals were able to officially declare themselves bankrupt, which made it impossible to collect debts from them even in court.

Therefore, various programs for refinancing loans, loans and debts have gained popularity. Citizens are increasingly turning to banking institutions to launch this program.

Main concepts

To understand how this program works, you need to understand the term “refinancing.”

This concept refers to the process of re-borrowing funds to cover another loan product.

That is, the client receives a new loan, at a lower interest rate, in order to repay the previous loan, in order to avoid arrears.

The borrower covers the previous, more “expensive” loan with funds from another bank.

Now he does not owe anything to the original borrower, but owes it to another lender. After a certain time, it will be possible to repay this loan in the same way.

Typically, this procedure is used by public and private lenders to protect doubtful accounts receivable. Often used to pay off consumer and mortgage loans.

When can I use it?

Refinancing can be used when the borrower has already paid off part of his debt. At the same time, he repaid it in good faith, without delays or delays.

Most often, mortgage loans are refinanced. The fact is that the collateral for it is the purchased apartment.

And if you refinance, the mortgage will be repaid, and the collateral will not be in danger.

In order to take advantage of this procedure, you must be a bona fide borrower, that is, repay your loan without delays or debts.

You need to find a bank that works exactly according to this program. The requirements for borrowers to apply the program are exactly the same as for borrowers when applying for the initial loan.

1. Coming of age.
2. Full capacity.
3. Have a certain amount of work experience.
4. Have a certain level of income.
5. Positive credit history.

Refinancing loan debts

The main task of refinancing a loan is to pay off the debt. If a borrower stops making payments on his loans, he will fall into debt, which will lead to a deterioration in his credit history.

The emergence and prolongation of debt can lead to the following unpleasant consequences:

The need for refinancing arises when the market situation changes and rates on similar loans decrease. A sample application for refinancing can be downloaded.

Lender banks are in no hurry to reduce interest rates on existing loans.

To obtain a loan under the refinancing program, you must take the following steps:

Study information on banks	who are working in this direction
Visit one of the selected banks	and prepare a corresponding statement
Submit the necessary documents for consideration	and now you need to visit the bank where the initial loan was opened
You need to find out in the credit department	Has the bank imposed a moratorium on early repayment of this loan?
If there is no moratorium	then you need to negotiate on refinancing the existing loan
If agreement is reached	then you need to visit the refinancing bank again and sign the appropriate agreement. Funds will be transferred to the account of the primary lender to repay the loan

What are the requirements?

To get a new loan to refinance your previous one, you must meet the same requirements as when you applied for your first loan.

That is, the client must be:

It is necessary to find out from the creditor bank whether there is a ban on early repayment.

Some institutions, in order to obtain maximum profits, impose a moratorium on the early repayment of consumer loans issued in the amount of up to 30,000 rubles.

Video: how to re-borrow funds

How is it different from restructuring?

Recently, during the financial crisis, borrowers began to use 2 ways to avoid incurring loan debts.

1. Refinancing.
2. Restructuring.

These 2 concepts should not be confused. Refinancing is a re-borrowing of funds to pay off a more “expensive” loan.

And restructuring is a review of the debt structure within the framework of the loan agreement. Revision means changing lending conditions to more optimal ones.

The terms of the loan are:

• loan amount;
• the interest rate at which it was issued;
• loan terms.

Interest rates change over time. As a rule, in the direction of decrease. But banks are in no hurry to reduce interest rates on loans already issued.

And it turns out that the borrower repays a loan issued at 13% per annum, and now the same bank is lending a similar loan product at 9% per annum.

Therefore, the client has the right to write an application addressed to the head of the bank to change the terms of the loan.

Most often, it is the interest that is revised, since a reduction in the rate leads to early repayment or a reduction in the amount of the monthly payment.

If the bank's management approves the restructuring of a previously issued loan, then a new loan agreement or an additional agreement to an existing agreement will be concluded with the client, which will specify new conditions.

When refinancing, a new agreement is also concluded, since the subjects of the transaction change.

The borrower remains the same, but the lender will be different. After repayment of the initial loan, the agreement with this bank will be terminated.

Restructuring takes place within one credit institution, and when refinancing you need to look for another bank. Credit institutions do not refinance their own loans, it is not profitable for them.

Therefore, the borrower is forced to look for those banks that provide programs for repaying loan products from other banks.

The new loan may be larger in amount than the original, but it is more profitable in terms of rates and terms.

Therefore, before refinancing with another institution, it is worth calculating all possible risks and losses.

What are the features of refinancing?

To minimize your credit debts, it is necessary, as part of on-lending:

• reduce the rate;
• increase the borrowing period;
• change the amount of monthly payments downward;
• replace several creditors with one.

But in order to avoid getting into an even worse credit situation, you need to take into account some of the nuances of refinancing:

It makes no sense if we are talking about small short-term loans	it is beneficial for long-term loans for large amounts. For example, a young family took out a mortgage and bought an apartment. A rate reduction of even 2% will be a significant saving. Therefore, you should not start refinancing your utility debt by taking out a loan from a bank. You will need to pay interest on the loan. Therefore, it is better to contact friends/acquaintances/relatives
If the original lender charges a penalty for early repayment of the loan	Is it worth it to refinance?
If the original loan had collateral	then upon refinancing, the collateral will be transferred to the new lender. For example, the collateral is a car purchased under a car loan program. When reborrowing, the car will need to be pledged to the refinancing bank. In addition, while all documents are being reissued, you will have to pay increased interest, since during this period the new loan is not secured by anything

Many banks are enticing with offers to refinance existing loans under more favorable conditions. You can also find another name for this service - refinancing. Let's look at what loan refinancing is and how to apply for it.

What does loan refinancing mean?

When applying for a loan, borrowers are usually interested in two questions: what will be the overpayment, or for what maximum period can a contract be concluded. Most banks do not offer the most comfortable conditions for new borrowers, since the risks of non-payment on such loans are higher than when cooperating with existing clients. Therefore, the bulk of contracts are drawn up on standard terms. For example, in 2015 it was possible to take cash at 25-30% per annum, in 2016 – 20-25% per annum. Today you can find offers from 12% per annum for standard programs and from 13.5% for refinancing programs.

Debt refinancing solves problematic issues for both the bank and the population. On the one hand, the bank receives a time-tested client, and, on the other hand, the borrower eases the loan burden through a new agreement. In other words, what is refinancing of a consumer loan is the execution of an agreement for a new consumer loan, the purpose of which is to repay existing debts in other banks.

Conditions for refinancing

As with standard loan products, refinancing has basic conditions - term, amount and interest rate. Loan terms usually do not exceed 5 years. Increasing the term of the contract allows the borrower to reduce the payment. This option is often used by banks themselves during restructuring if the client’s financial situation has changed and he is unable to service his debts.

A fair question arises: restructuring and refinancing a loan - what is the difference? The first procedure is carried out within the framework of an existing agreement, when the conditions for further repayment of the debt and possible options for solving the problems that have arisen are reviewed, namely:

• payment deferment;
• increasing deadlines;
• write-off of part of the penalties and fines.

Refinancing is the signing of a new agreement with the establishment of new parameters (interest rate, term and size of the loan). The amount of on-lending can be equal to the debt on one loan or several at once (VTB 24 - up to 6 loans, Sberbank - up to 5). Also, some banks add a certain portion of funds for personal needs. For example, VTB 24 and Sberbank offer refinancing for 3 million rubles, and Rosselkhozbank – for 1 million rubles. In addition, Sberbank can give up to 135 thousand rubles. for personal purposes, if necessary for the borrower.

The annual rate can be either fixed for all clients or set depending on the personal parameters of each borrower. For example, in VTB 24 it is in the range of 14.5-15%, in Sberbank - from 13.9 to 14.9%. Rosselkhozbank, on the contrary, indicates only the initial value - 13.5%. When only the minimum value of the rate is indicated, there is a high probability that after submitting the application it will be many times higher.

Please note that if the difference between the current rate and the new one is less than 2%, then refinancing is not advisable.

Banks provide on-lending to various loans: consumer, mortgage, car, credit line cards. As a rule, if the previous agreement was drawn up with the provision of security, then the new one is drawn up along with it. There are options for replacing the collateral with a surety or vice versa. You can also find banks where collateral is not required when concluding a new agreement (Sberbank, VTB 24).

The benefit that the new interest rate promises may be offset due to the significant costs of registering collateral (registration of encumbrance, independent appraisal, notary services). In this case the difference in the annual rate must be at least 4%.

As you can see, the lending conditions are more than acceptable, so many borrowers may be at a loss as to why refinancing a loan is so profitable, what’s the catch? There is one weak point in the entire procedure, but it does not relate to the execution of a new contract, but rather to the closure of an old one. When submitting an application for refinancing, you need to have the exact amount of debt under the existing agreement. To do this, you must write an application to the bank for early repayment of the debt. Based on the official notice, the creditor bank will recalculate the debt based on the date on which the funds will be deposited (indicated 7-10 days in advance, so that there is time to prepare documents at the new bank).

Application example

If you do not draw up such a statement, the bank may not close the credit account, but continue to deduct from it a monthly amount corresponding to the minimum payment. Subsequently, this can lead to the formation of delays. Another negative aspect of the absence of an application is the possible imposition of penalties for failure to comply with the procedure for early closure of the loan.

Bank requirements

If with a regular loan the bank makes demands only on potential clients, then when refinancing it is important that the condition of the open loan meets the conditions of the new lender. The following standard requirements are put forward to the borrower:

• age restrictions 23-65 years (less often from 21 years);
• permanent registration;
• stable income that allows you to repay debt;
• total work experience of more than 1 year;
• current experience of 6 months.

Other conditions are also possible: territorial affiliation with a specific region, minimum income level, availability of a salary card or bank deposit, etc.

What is needed to refinance a loan from the requirements for the existing agreement:

1. A certain period with payments already made. For example, Rosselkhozbank allows loans for which at least 12 payments have already been made, and VTB-24 - more than 6 payments.
2. No delays under the contract. Some banks allow delays, but only if they lasted no more than 10 days or arose due to technical reasons (the payment was credited longer than required by internal bank regulations).
3. No extension or restructuring for a refinanced loan.
4. Until the expiration date of the loan/card at least 3-6 months left.

Since many banks are engaged in on-lending of various loans, another important point is the intended purpose of the loan funds. You cannot refinance a mortgage through a consumer lending program.

Refinancing procedure

It is immediately worth noting that refinancing a consumer loan is a rather lengthy procedure, insofar as we are talking about applying for a new loan, the borrower will have to spend some time collecting documents, submitting an application and waiting for a response, then applying for a loan and repaying the loan from other banks. During the entire period of paperwork, you must conscientiously fulfill your obligations to other banks and repay existing loans.

It’s worth starting with studying the services market insofar as this financial product is offered by many commercial banks, for example, Rosselkhozbank, Sberbank, Raiffeisenbank and others. All offers differ in interest rates and other conditions. First of all, when choosing a product, you should pay attention to interest rates. For example, if you pay a consumer loan at a rate lower than what you are offered a loan for refinancing, then refinancing in this case will be pointless.

So, after you have decided on a bank, you need to collect a certain package of documents. As a rule, this is a passport and salary certificate, a document confirming employment, they should be submitted to the bank along with the application form. Within a few days the bank will give you a decision: positive or negative. At the same time, you can immediately find out the interest rate that will apply to your loan agreement.

If you are completely satisfied with the terms of the loan, you must contact the bank where you are currently paying off your consumer loan and apply for early repayment of your obligations. This must be done, as required by law, no less than 30 days before the date of the expected payment.

Please note that a positive decision at the bank where you are refinancing is valid for approximately 90 days (it is worth checking separately), so the refinancing procedure should begin by choosing a bank and submitting an application.

After you have written an application for early repayment of the loan, you need to apply for a refinancing loan from the bank and sign a loan agreement. Your further actions will depend on the conditions of the financial institution that is refinancing the loan, for example, some banks themselves transfer money to your lender to pay off the debt on obligations, others, on the contrary, issue cash, for the intended use of which you will subsequently have to account.

By the way, it cannot be said that if your current consumer loan is secured in the form of collateral or a guarantee, then you need to re-register the documents for the refinancing loan. Although some banks do not require this. Also, do not forget about loan insurance for refinancing; without it, the bank will raise the interest rate for you and there will be no point in refinancing either.

For registration you will need: a passport, documents showing the financial situation of the borrower, a loan agreement/certificate with the full cost of the loan, as well as documents on collateral, if any. The loan refinancing scheme looks like this:

1. The borrower visits the bank where it is planned to open a new loan and submits the appropriate application (attaching the necessary documents).
2. If the decision is positive, the consumer visits the first creditor bank and informs about his intentions to repay the debt ahead of schedule. If this is possible, the bank accepts the application to close the account and issues a document with the full amount due.
3. With this document, the borrower returns to the second bank and completes the contract. Credit institutions themselves transfer money to accounts. If part of the funds is allocated for personal purposes, the borrower can cash it out at the bank’s cash desk or receive it on a credit card.

The application is considered no more than 2-5 days. To increase the likelihood of a positive decision, it is necessary to provide as many documents as possible. For example, checks from payment of monthly fees, SNILS certificate, TIN, international passport, certificates of ownership of property, etc.

Refinancing with open arrears

Such a situation as an overdue debt to a bank is no longer uncommon today, but still all conscientious payers are looking for an option through which they can resolve the debt issue without litigation and other troubles. Unfortunately, banks often refuse to work with clients who have a negative credit history and are in arrears with other creditors.

However, banks compete with each other and may make concessions to the client in order to attract profit. There are a number of banks that consider applications from borrowers with existing arrears to other banks, consider the list:

• Sovcombank;
• Renaissance Credit Bank;
• OTP Bank;
• UBRIR Bank;
• Eastern Credit Bank;

Just keep in mind that each individual application is considered individually; the bank may refuse refinancing without giving reasons. However, every borrower must remember that the delinquency must be no more than 90 days from the date of the last payment. In addition, the case should not be taken to court and sold to collectors, so if life circumstances are such that there is nothing to pay off the loan, it is better to think about refinancing in advance or ask the bank for debt restructuring.

You should not confuse the two different concepts of refinancing and debt restructuring, because restructuring is a change in the terms of the existing loan agreement, and therefore the bank increases the loan term in order to reduce the monthly payment and reduce the financial burden on the borrower.

Profitable or not

The question of whether refinancing is profitable or not is quite complex, because you, in fact, are taking out a new loan and will again have to pay in accordance with the payment schedule, that is, this procedure will not free you from loan obligations. However, refinancing has a number of advantages, first of all, if you have several loans in different banks, then you transfer them into one loan, you will need to pay one bank once a month, which is of course more appropriate for the borrower .

Another advantage of refinancing is that if you choose the right bank, your monthly payment will be lower than what you paid before. That is, this is beneficial only under the condition that the interest rate on the refinancing loan will be lower than the current one.

The third advantage is that you can independently choose the size of the monthly payment, that is, the bank will offer you to enter into an agreement for a period, for example, from 1 year to 10 years, respectively, the longer the term, the lower the monthly payment amount. You can choose a term with monthly payments that will be as comfortable as possible for you and your budget.

Finally, there is one more advantage - the borrower may not reduce the amount of the monthly payment, but reduce the amount of overpayment by reducing the loan terms. Although, on the other hand, any loan can be repaid ahead of schedule, including a loan for refinancing - this is not prohibited by law, and there is no fee for the procedure.

To summarize, what is consumer loan refinancing? In fact, this is a new bank loan, the funds of which can only be used to repay your existing loans. The profitability of this operation is determined individually, that is, in some cases, refinancing does not make sense at all, especially if the rates on the refinancing loan are higher than the current value.

Government debt refinancing is a system of paying off a government's original debt by issuing new loans. The public internal debt of the Russian Federation consists of debt from past years and newly arising debt. Domestic public debt leads to the redistribution of income among the country's population.

The state resorts to refinancing in cases of budget deficit or increasing public debt. They are placed on the domestic or foreign market. In the first case, internal debt is formed, in the second - external. If the state cannot cope with the payment of debt obligations under coupons, then it resorts to refinancing them.

This is the most radical option for refinancing the state's debt. In this case, the new authorities refuse to pay debts under the obligations of the previous government. By rolling over government debt, you can extend the period for repayment of principal and interest. Its purpose is to facilitate the process of debt repayment.

Basically, this method of refinancing is forced. Initially, to formalize the debt, the state issues bonds that represent its debt obligations. This method of refinancing public debt allows the government to restructure bonds into shares of private investors. This process is carried out through their resale on the open market and in this way is somewhat reminiscent of securitization.

It helps slow the rate of debt growth or reduce the size of government debt in absolute terms. These are the main ways to refinance government debt.

European Debt Crisis - This article describes current events. In this case, the external debt will be repaid using future income. External debt is obligations to non-residents in foreign currency.

The Law on the Federal Budget for the next financial year approves the Program of State External Borrowings. This program is a list of external borrowings from the federal budget for the next financial year, indicating the purpose, sources, repayment terms and the total volume of borrowings.

The law on the federal budget for the next year determines the maximum amount of state guarantees. But they have the right to receive loans from budgets and state extra-budgetary funds. The register of debt of state unitary enterprises is maintained by the Treasury. Information on the volume of debt obligations of the Russian Federation, constituent entities of the Federation and municipalities on issued securities is entered into the State Debt Book.

In order to ensure its foreign policy and foreign economic interests, Russia provides loans to foreign countries. External financing is attracted by the state to finance its expenses and the state budget deficit when it is impossible to mobilize these funds within the country.

International financing is structured by terms (in terms of lending) into short-term (up to 1 year), medium-term (from 1 to 7 years) and long-term. Servicing public debts, internal and external, includes in stages: repayment of interest; repayment of the capital amount of the debt and its refinancing if necessary. If the conditional debt of the state is 100 thousand units. Public debt management is one of the main directions of state financial policy.

The procedure, conditions for issuing (issuing) and placing debt obligations of the Russian Federation are determined by the Government of the Russian Federation. This activity is called: public debt management. Control over the state of public debt is carried out by representative and executive bodies of state power. Deferment of loan repayment is carried out in conditions where further active development of operations to issue new loans is not effective for the state.

Refinancing government debt

The state's obligations in the field of social and pension security are also not taken into account. The amount of public debt is expressed in national currency or its equivalent in any other currency. The assessment of solvency, in turn, depends on the refinancing rate and the rate of economic growth of the country. However, these actions lead to a further loss of confidence and creditworthiness and (through inflation) to the devaluation of all financial assets in that currency.

The national debt is secured by federal ownership. Technically, public debt consists of the government issuing debt obligations - bonds. A debt servicing system requires the creation of a debt management system.

Lending is an affordable way to get money for desired purchases. Banks are ready to finance the purchase of real estate, cars, food products and lend money at interest. At the same time, banking institutions may not restrict a solvent borrower from lending. Therefore, a situation may arise when a client has two, three or even five contracts drawn up, in which one can easily get confused. And over time, loan terms may not be as favorable as current offers on the market. There is a way out - refinancing. In this article we will tell you what loan refinancing is, how to use it and how to complete such a transaction.

What is refinancing

Debt refinancing is the repayment of existing loan obligations using borrowed funds from the lender by drawing up a new agreement.

• What is this, in simple words? This means that you can contact any bank that has loan refinancing programs and ask to pay off debt on loans from other banks. Accordingly, a new loan agreement should be drawn up on more favorable terms. Refinancing is applicable if:
• to combine several contracts into one. Each bank sets its own repayment schedule, which specifies the dates, amounts, and accounts where money must be deposited. This may be inconvenient and a payment error may occur. Therefore, it is advisable to combine everything into one loan;
• reduction in monthly payment. This is possible by increasing the loan term;
• convenience of payment. The current lender is unable to provide a properly functioning fee-free payment method. In this case, you can choose a more convenient option by drawing up an agreement with another bank.

Debt refinancing is a popular banking product that is now in demand. Requirements for borrowers remain standard, as in the case of regular consumer lending. What does refinancing mean for a bank? This is a regular consumer loan.

After all, a banking institution receives a client, and where the money is transferred - for a car purchase and sale transaction, as with a car loan, or to pay off a debt in another bank - is not so important. Although, in fairness, it is worth noting that each line of lending or even each individual offer in a particular bank may have its own specific requirements for the borrower.

Let's consider the standard requirements of banking companies:

• age from 18 to 65 years at the time of loan expiration. Some banks are ready to raise the maximum limit for pensioners to 75 years of age;
• solvency. The monthly payment amount should not be more than 40% of income;
• credit history. A positive credit history is a subjective decision of the bank;
• Citizenship of the Russian Federation is required;
• the place of registration or actual location must be in the region where the bank has a branch;
• work experience of at least six months at the current job.

In addition to the requirements directly to the client, banks put forward a number of conditions under loan agreements for refinancing loan debt:

• no arrears on current loans;
• in the case of a consumer loan, the contract term should not exceed 5 years. The maximum mortgage term is 30 years;
• At least six months have passed since the start of the contract, and the client has made at least 6 payments.

These are the standard conditions that most banks follow. To clarify the possibility of refinancing a consumer loan at a particular bank, it is better to contact the company’s website or specialists.

Refinancing loans is something between drawing up a new loan agreement and providing information about your loans. Therefore, the documentation package can be divided into two types.

Borrower information:

• passport;
• a copy of the work book;
• documents on income in the form of a bank or in the form of 2-NDFL, statements from a banking institution and others.

Information on the refinanced loan:

• account details for debt repayment;
• certificate of absence of overdue debt;
• statement of repayments for the entire loan term;
• a certificate with an amount sufficient to close the contract and payment terms.

Banks will refinance a loan only if the loan documents are no later than three days old. Therefore, you need to obtain certificates immediately before refinancing.

How to get such a deal? Let's consider how banks refinance a loan, what is needed for this and how the borrower acts in this case.

1. Select the financial institution where the refinancing will take place. To do this, you can look at banking websites to find the best offer.
2. Submit an application on the company website. The bank will provide a preliminary decision on the possibility of this operation.
3. After approval, the application will be reviewed no later than 3 business days; you must go to those banking organizations that currently have unclosed loans and ask the bank to provide information from the section “Information on the refinanced loan.”
4. Take the received documents with documentation about the borrower to the selected bank.
5. Wait until the information is verified and the company provides a final decision on the possibility of refinancing. May take 3 business days.
6. Head to the branch to sign a new loan agreement. The schedule, loan documents and repayment of refinanced loans are obtained.
7. After 5 working days, receive certificates about the closure of contracts.
8. Take advantage of a new loan on favorable terms.

The concept of “refinancing” is that the new creditor pays off debts, but this definition means that the client has a debt to the new bank, which he undertakes to pay.

Why do banking companies refinance loans? After all, in this case the borrower benefits, which automatically means that banks lose profit. Is there really no banking solidarity that would allow market participants not to use such methods?

In fact, such an operation is beneficial to each party. This is a working method that allows financial institutions to both earn money and ease the credit burden on the borrower. As a rule, such a service is used by those clients who, realizing that they will not be able to pay the loan, are looking for alternative options.

Accordingly, the banking company in which the agreement was drawn up will not suffer losses if the borrower is unable to pay. Indeed, in this situation, you will have to do a lot of work, sue, demand repayment of debts, which affects the company’s reputation and also entails additional financial costs. Yes, if the contract is closed ahead of schedule, then the banks do not receive less interest, but the main profit is already included in the first 6 payments in the case of a consumer loan, so it is profitable.

A banking organization that refinances a loan agreement receives a new client who will be loyal in connection with the assistance provided. Of course, you will have to pay part of the interest, but the money will be repaid from further relations with the borrower.

A client who finds himself in a difficult situation has the opportunity to ease financial pressure by concluding a deal on more favorable terms. In addition, in this way the credit history will be maintained in proper quality. After all, the main thing is that there are no delays, and who pays off debts is not so important for financial institutions.

Before completing a transaction, it is worth clarifying whether it will really be profitable. After all, many companies, in addition to fixed assets, may include additional conditions in the cost of lending, such as insurance, SMS information and other services.

It is also important to pay attention to possible commissions, payment methods, access and capabilities of your personal account. After all, a loan is not just an amount and a rate, but a whole product that includes a whole list of various conditions.

I would like to note one more way to improve loan conditions. Every client can use the restructuring service if the bank agrees. The difference between refinancing and restructuring is that the first operation is carried out between third-party organizations, while restructuring is possible within one bank.

This can save a lot of time and avoid collecting a huge package of documents. It is enough to contact your lender and write an application for the provision of such a service.

The financial institution can consider the application for up to 30 days, and if the decision is positive, it will invite you to jointly change the terms of the loan. This way you can:

• reduce the interest rate;
• reduce your monthly payment;
• change the loan currency;
• ask for a holiday in the payment schedule;
• make other changes that can be decided individually.
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Lending rates change quite often. At least, if you wish, you can always find a similar loan program with more favorable interest rates. Therefore, if it becomes unbearable to pay the loan, you can refinance it or refinance it. What is the difference between these 2 terms? And, most importantly, what is more profitable for the borrower?

What is special about refinancing?

By this term, financiers understand the issuance of a fundamentally new loan. That is, the borrower collects a new package of documents, applies to another bank (not the one with which the agreement has already been signed) and opens a new credit line.

The funds from such a loan can be used for only one task - repaying the old loan. In fact, the borrower does not even receive the money in hand - the bank itself makes a settlement with its client’s lender.

What are the benefits of refinancing? First of all, the opportunity to pay a lower percentage to the bank, thereby reducing the monthly contribution or total overpayment.

What is special about refinancing?

The end result is, in principle, the same - the borrower can pay the loan on more favorable terms. But the way this program is implemented is radically different - the borrower does not apply to a new bank, but to the same one with which he previously signed an agreement. A financial institution is not always willing to renegotiate interest rates - after all, this is their profit. But the bank client may focus on the difficult financial situation and the inability to continue making monthly payments under the same conditions.

Why might a bank revise interest rates? Despite the unprofitability of the deal for the bank, refinancing will help retain the client. Agree that less financial attractiveness is better than a problem loan with a huge debt and attempts to pay it off through collectors or through the court.

All that remains is to persuade the bank manager to reconsider the terms of the loan. This can be done if the financial situation worsens:

• transfer to a lower paid position;
• job loss;
• additions to the family;
• serious illness of one of the relatives.

It is enough to present to the bank a document confirming that the borrower really needs to review the terms of the loan.

Additional benefits for borrowers

Refinancing or refinancing will require the borrower to have some free time and a willingness to collect additional documents.

But you can count on certain benefits:

Reducing the monthly payment is an obvious advantage. After all, it will simply be easier for the borrower to regularly deposit money into the bank. Although you should not greatly underestimate the monthly payment - practice shows that this increases the loan repayment period.

Reducing the overall overpayment on the loan. Financiers emphasize that this is the most profitable option for the borrower. Of course, it is not a fact that the monthly payment will become less. But you will be able to save on the total overpayment and quickly repay the entire debt to the bank.

Possibility to combine several loans into one. If the 2 previous points are available both for refinancing and for on-lending. If you have several loans issued from different banks, it is better to look for a profitable refinancing program. This will allow you to consolidate loans so that you can make one payment once a month instead of several to different lending institutions. And overpaying at a lower interest rate will become significantly more profitable.

Withdrawal of real estate from collateral. This option is not always possible. But if a mortgage has been issued and approximately half of it has already been paid off, then you can find a consumer program without collateral. And then the acquired real estate can be disposed of at your own discretion - rented out, sold or exchanged for other housing.

How to proceed when refinancing or refinancing

Here are detailed instructions:

In the case of refinancing a loan, you must come to the branch of the same bank with which you previously signed the loan agreement and honestly say about the impossibility of paying the loan on the existing terms. Sometimes you will need to take supporting documents - for example, a work record certified by the employer or a certificate from the hospital about the need for expensive treatment. A bank employee may suggest renegotiating the agreement by lowering the interest rate (which is preferable) or reducing the monthly payment. If you cannot reach an agreement with the creditor bank, then you can move on to the second point.

First, you should select several suitable loan programs in different banks with interest rates that are at least 2 positions lower than the one for which the bank loan is already being paid. Then you need to send online requests to these banks in order to know exactly which bank is ready to refinance the loan. All that remains is to choose the most profitable program and collect the required package of documents for it.

How to check the benefits of refinancing or refinancing

Many borrowers, especially those who are far from the world of credit relationships, are not sure that they will be able to choose the best option.

In this case, you can contact financial experts - in fact, the same bank employees - so that they can calculate the total overpayment in each specific case. Or you can do this yourself using a loan calculator.

After all, it’s enough to spend a little time refinancing or refinancing your current loan to save several thousand rubles.