Repay existing loans? Take out a new loan

Some people have a loan that they cannot easily get rid of. The loan is too high, the cost of the loan is too high or they simply do not earn enough to pay off the loan. Are you also in this situation, but do you want to pay off your loan at all costs? Then you can choose to take out a new loan and repay the existing loan in this way. It may sound strange to take out a new loan and pay off an existing one, but it can work. You can read about the benefits of this solution and the side note of this solution for paying off a loan in this article.

The benefits of taking out a new loan

The benefits of taking out a new loan

There are various benefits associated with transferring existing loans to one new loan:

  • Your loan interest is lower, which means that you have to pay less in interest each month and can therefore repay more.
  • You get a better interest rate for a large loan amount than for various smaller loan amounts.
  • You can immediately repay bad loans with a late payment or high interest and therefore dispose of them.
  • You can choose a new lender if you are not satisfied with the current lender of your loan.
  • You can do all the individual loans in one loan, which makes the financial situation clearer.

It may sound strange to take out a new loan, but as you can see, this brings various benefits. Certainly if you have various small loans, it is wise to transfer your loans into a larger loan.

The transfer of small loans into a large loan: the side note

The transfer of small loans into a large loan: the side note

The only caveat to this solution for paying off your debts is that it is not always easy to get a new loan. Certainly if you have a negative BKR listing, lenders will be hesitant about providing a new loan and it will be difficult to take out a new, overarching loan for your small loans.