On the eve of the New Year, I want to please readers with pleasant information. I tested it myself last week, and now I recommend you another way to save on a loan – Re-crediting (or scientifically "Refinancing"). Next, I will tell you how I reduced my monthly payments from 7,200 to 4,800 rubles. And in the end, when I close the loans, I will also save 10 thousand rubles on interest.
The essence of the method is simple – you take out a new loan to repay the old one. At the same time, of course, you take a loan in the amount of the remaining debt on the old loan. What could be the benefit?
1. The most understandable thing is, of course, a reduction in the % of the loan. For example, there was 21%, you took under 19%.
2. Reduction of monthly payments. This is due to the fact that you take a smaller amount (You take only for the balance of the debt), but again for the same period, for example for 5 years.
In general, it is clear, now let's try to understand in more detail:
1) Reduction of % of the loan. In this matter, you need to persevere and spend a little time. And the actions are very simple – You call any bank that offers loans at the same% as yours or a smaller one and directly say: "I have a loan in the amount of XX rubles, at YY interest per annum. I would like to re-borrow from you. Can you offer me a loan at ZZ interest per annum?". Yes – great. No – we call the next bank. Personally, I was lucky the first time.
2) Reduction of monthly payments. Why this happens is indicated above. But this positive phenomenon creates a crossroads for you. Which of these you choose depends directly on your current goals:
— Reduce monthly expenses — the difference in payments (the amount that was paid earlier is the amount that will be paid now) You put it in your pocket, thus saving your monthly budget. But in this case, you will definitely overpay on interest on loans. Imagine – you have previously paid interest, and once again take out a new loan. And if you have annuity payments, then you will pay 50% of the interest in the first 30% of the time. That's it.
— Reduce overpayment on loan interest — the difference in payments you use for early repayment of a new loan. Thus, you can save on overpayments on interest for the loan.
For example , I did this. I had two loans with a total debt balance of 170 thousand rubles. Payments on them were 2,600 and 4,600 rubles. The interest rate is 18% and 21%. I called a competitor bank of current banks, directly told him about my loans, that I regularly pay for them, that I have a good history in this bank (it really is) and asked if they could give me a new loan in the amount of 170 thousand rubles at 17.9% per annum (this was their lowest advertising percentage) for re-crediting current loans. They thought a little and agreed. The total payment became 4,800 rubles (it would have been 4,400 rubles, but I also took out insurance – this is a topic of a separate conversation). The difference in payment (7 200 – 4 800 = 2,400 rubles) I will additionally spend on early repayment of the loan. As a result, I will close a new loan not in 5 years, but in 3 years and 3 months, and in total I will save 10,569 rubles on interest payments. In fact, I will save more on interest, since I will pay a large amount every month, but the calculations show that I will win even if I pay the same amount for loans.
How profitable can it be in your case and how to calculate it? Let's try to figure it out.
First, let's analyze the theory. It doesn't make sense to consider the case when you simply reduce your monthly expenses – everything is clear here anyway. You just pay less. You can calculate how much more you will eventually overpay, compared to the case when you would not be overdrawn. But again, it all depends on your current goals. There are situations when it is really more important to simply reduce the monthly payment.
But the situation when you use the released funds for early repayment of the loan is more interesting. In fact, the calculations are decomposed into two situations:
A) When you re-credit one loan;
B) When you re-credit two or more loans;
In fact, the difference is only in the complexity of the calculations – in the first case, they are, of course, simpler)
A) In this case, everything is simple. Do you count or look at the bank's calculations that are attached to the contract:
— How much of the principal debt have you already repaid and how much is left;
— What amount of interest have you already paid on the loan and how much you still have to pay;
— Consider how much you will overpay on a new loan if you repay it ahead of schedule.
— In order for this to be profitable, the following inequality must be met:
(The amount that you have already overpaid on the loan + the amount of the planned overpayment on the new loan) < (the amount of the total overpayment on the first loan)
The resulting difference is your benefit)
B) In the case when you have several loans, you need to:
— Repeat the above sequence for each loan;
— Summarize these indicators for all loans and compare them with a new loan;
By the way, there is also a moral bonus from packing several loans into one – it is more convenient to pay).
Conclusion: Count. Re-credit yourself. Save money!
And Happy New Year, financial success to you in 2013!))
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How to invest free money profitably: make a deposit or repay a loan?
