Transferring a loan to another bank – is it profitable?
In the era of widely available information on virtually any topic, consumers like to first increase their knowledge about the services they plan to use. This applies to, among other bank loans. Despite this, you may find that you will like another offer during your commitment. Transferring a loan to another bank – is it profitable?
Before you get a loan
In order to get a loan, the consumer must undergo detailed verification. His creditworthiness, financial condition, earnings, other liabilities and repayment history of current liabilities in banks and loan companies will be checked. In the case of some loans, eg mortgage or car loans, the bank may also ask for additional collateral, such as payment of own contribution and dedicated documents directly related to the purchase of property .
After passing this tedious verification process, the fruit is credit on individually agreed terms. Based on this information, the bank determines the final loan amount, and adding additional costs (eg commission and interest rate), the monthly installment is selected. The borrower can also negotiate, eg the installment amount and certain costs. Ultimately, the funds are finally paid into a bank account, and the consumer can take care of the purchase for which the loan was made.
When can you decide to transfer your loan to another bank?
However, it often happens that many borrowers do not stop monitoring the situation on the banking market. They check the banks’ offers on an ongoing basis, compare the loan terms with those offered by other fairy tales and sometimes they are disappointed. There may also be other reasons, such as loss of the bank’s market credibility, poor service level, difficult contact and the like. As a result, the consumer, the consumer, may also lose confidence in a given bank and wants to terminate cooperation with it, being aware of the need to repay the loan.
In addition, there may also be life situations in which simply repayment of the loan under current conditions is too much of a financial burden . The consumer, for example, needs a more convenient monthly installment because he had a child, had to renovate the apartment, repair the car, pay for treatment, etc.
If you no longer want to use the loan you have obtained because of the above factors, you do not have to clench your teeth and pay it back to the very end. In such circumstances, you may want to consider transferring your loan to another bank. Let’s get to know how it works and whether it is worth undertaking it.
Transferring a loan to another bank – how does it work?
The banking vocabulary is a service of transferring a loan to another bank, it is professionally called refinancing . It consists in the fact that the borrower decides to take a loan in a new bank. This one undertakes to repay the existing debt in the “old” bank, at the same time granting a new loan on more attractive terms , although not in every respect the new loan is always attractive in terms of costs.
Importantly, if the existing loan was taken for a specific purpose (for example, the aforementioned purchase of an apartment or car), it cannot be changed . This means that the new liability at another bank should be further settled for a reason previously established.
Using the loan refinancing service is not difficult. It is enough to find an interesting offer for another consumer of a new bank and submit a request to obtain a commitment there, obviously highlighting the whole situation. It will also be necessary to inform the bank about the willingness to change the bank, what should be said in advance.