Benefits of applying to the bank, refinancing loans

Refinancing is essentially a routine procedure for obtaining a targeted loan, the purpose of which is repayment of an existing loan in the same bank or in another bank of the Russian Federation.

In certain situations, the refinancing for the borrower is the only way to significantly reduce the credit burden, avoid paying a high commission for payments that are overdue, and get a loan at which the interest is much lower (which makes it possible to repay this loan without large financial losses for the family). There is another important advantage of refinancing for the client. It consists in the fact that the client maintains a positive credit history and will not be persona non grata for creditor banks in the future.

It should also be noted that refinancing is a profitable transaction for the bank. Yes, the bank is going to reduce interest, but gives the client more credit. This situation is much more profitable than suing the client, without having an absolute guarantee of repayment of funds previously employed.

To apply to banks refinancing loans, borrowers are often in a difficult financial situation. Refinancing involves providing the bank with a lucrative loan to cover the existing debt. When is this solution profitable and in what financial institution should I apply?

Advantages of on-lending

To address refinancing consumer and mortgage loans, banks borrowers have 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 negotiates for on-lending. It is possible to conduct the operation in the former credit organization, if a more profitable program appeared in it. In this case, you will have to spend less time collecting documents and waiting for a response.
• Consolidation of several borrowed loans. It is necessary to apply to a bank refinancing various loans if several debts were created, so it is difficult for the borrower to control the payment terms. As a result, there remains one debt, which is easier to cope with.
• Payment of an overdue loan. If the client is in a difficult situation, on-lending will save fines and penalties. A contract is concluded, under which the client pays a new debt and does not spoil the credit history.

Where it is better to apply for refinancing?

To find a profitable program for on-lending, compare interest rates and requirements for borrowers. Some banks are engaged in on-lending without restrictions, while others offer a service if the borrower does not have overdue debts. If refinancing is offered without income statements, the percentage will be higher. In this case, the benefit of using the service will decrease.