Refinancing is essentially the usual procedure for obtaining a target loan, the purpose of which is to repay an existing loan in the same bank or in another bank of the Russian Federation.
In certain situations, refinancing for the borrower is the only way to significantly reduce the loan burden, avoid paying a high commission for payments that are overdue, and get a loan at which the percentage is much lower (which makes it possible to repay this loan without large financial losses for the family). There is one more important advantage of refinancing for a client. It lies in the fact that the client maintains a positive credit history and will not be a non-grata person for creditor banks in the future.
It is also worth noting that refinancing is a profitable transaction for the bank. Yes, the bank is going to reduce interest, but provides the client with a larger loan. Such a situation is much more profitable than suing a client, while not having a one hundred percent guarantee of the return of funds previously occupied.
Contact in , borrowers often have to face a difficult financial situation. Refinancing involves the provision of a profitable loan by a bank to cover existing debt. When is such a decision profitable and which financial institution should I contact?
Benefits of Refinancing
Borrowers have to apply to refinancing consumer and mortgage loans banks in several cases:
- Getting a loan at a favorable interest. If the borrower received a loan, and after a while found a less burdensome offer, he turns to a financial institution and agrees on a loan. It is possible to carry out the operation in the previous credit organization, if a more profitable program has appeared in it. In this case, you will have to spend less time collecting documents and waiting for an answer.
- Combining several loans taken. It is necessary to contact a bank refinancing various loans if several debts have formed, therefore it is difficult for a borrower to control the terms of payments. As a result, there remains one debt, which is easier to handle.
- Payment of an overdue loan. If the client is in a difficult situation, re-lending will save you from fines and penalties. An agreement is concluded under which the client pays a new debt and does not spoil the credit history.
Where is it better to apply for refinancing?
To find a profitable lending program, compare interest rates and borrower requirements. Some banks are engaged in on-lending without restrictions, while others offer a service if the borrower has no past due debts. If refinancing is offered without income statements, the percentage will be higher. In this case, the benefit of using the service will decrease.