Installment loan offers you low interest rates and flexibly selectable terms for repayment. Nevertheless, it is not easy to plan future-proof loans years in advance.
We present you with special repayment loans as the optimal solution for your future-oriented credit planning. Learn how to make the most of the special repayment option. Nevertheless, not everything that is shiny is gold. In addition to the advantages, we list the mistakes that borrowers love to make.
Special repayment loan – never heard of?
Obviously, a loan with a special repayment corresponds to a classic installment loan. Applied online via a free credit comparison, the money can be in the account in 48 hours. Not even a glance at the interest rate level reveals the special feature of the free special repayment. Even low-interest installment loans can be taken out with the “special repayment” credit condition.
The special feature is that the installment loan is flexible and future-proof. With installment loans, borrowers only have the opportunity to adjust their installment amount over the term if the contract is signed. Every borrower is faced with the choice of paying off with maximum financial strength or preferring to choose small installments. The small installments are supported by the fact that the agreed monthly payment, even in the event of financial setbacks, remains secure.
The significantly longer repayment period and the associated noticeably increased financing costs speak against small installments. However a borrower chooses, his decision may prove to be wrong in the future. He either pays off too long or starts skidding at the first financial rejection. If the installment loan were concluded as a loan with a special repayment, such worries would be avoidable.
Please do not confuse special repayment with the legally guaranteed right to early loan repayment by special repayment. The lender only has to accept the special payment for early loan repayment if the remaining debt would be fully paid. Loans with special repayments allow additional repayments in installments.
Free special repayment – how is the advantage?
The right to make a special repayment free of charge once or several times a year allows prospective borrowers to finance in the long term. Low payments in installments protect the household budget. They keep them liquid and open up the possibility to save. The budget can still react flexibly to unexpected special expenses, such as a car repair, without overdraft. Nevertheless, the term is not “set in stone”.
Of course, unused money should not be parked on the current account or the savings book without interest. Especially not when interest payments have to be made for current credit. If a reasonable amount has accumulated in the account, the loan with special repayment offers the possibility to make additional repayments. The result of the special repayment is not a further reduction in the installment amount.
The remaining payment term would be reduced with the special payment. Due to the associated interest recalculation, the total cost of financing is reduced. Thanks to regular special repayments, the loan can be repaid just as quickly as if it had been concluded with a short term and a maximum rate. The pros and cons of paying off in small installments are no longer an issue for loans with special repayments.
Special repayment instead of credit insurance – thought responsibly?
A loan with small installments and special repayments opens up scope. It can be concluded in such a way that in the case of ALG 1 or sick pay, the installment payment remains securely portable. This eliminates the two main reasons for opting for expensive credit insurance. Instead of investing 10 percent of the loan amount in insurance premiums, financing is simply significantly longer.
In various loan comparisons, we have already been able to demonstrate how extremely high the savings potential is compared to the risk. In principle, the approach of opting for always affordable rates without RSV (residual debt insurance) would be better than reasonable. On the other hand, it would be senseless from a cost perspective to agree the loan with a special repayment and to additionally take out credit insurance.
The RSV is not calculated back. Each special payment would reduce the term and thus the insurance risk. The only winner in such a constellation would be insurance. With each special repayment, you reduce your minimal risk anyway, without foregoing payment. The same applies in principle if people plan to reschedule an insured loan.
Risks – Loans with small installments and special repayments
At the beginning of the loan term, everyone is still enthusiastic about the idea of closing in the long term and paying back quickly. In the first few months, the difference between the maximum ability to pay in installments and the actual installment remains “well-behaved” in the checking account. But at some point everyone has a weak moment. A great special offer attracts. After all, money is also in the account, the reserve for special repayments is used for consumption.
However, only those borrowers who make additional repayments at regular intervals really benefit from the loan. – Provided there are no unforeseen costs. It would be advisable to make it somewhat difficult for yourself to use the reserve for the special repayment. Instead of being in the checking account, the money could be transferred to a savings book by standing order after each salary receipt.
There it is kept safe from unwanted or perhaps even unintentional access. The special repayment is made every six months to match the holiday and Christmas bonus. With additional income on the cut-off date, it is psychologically easier to use the savings with additional repayment of the loan.