(refinancing) - obtaining a new loan from a bank on more favorable terms for full or partial repayment of the previous one. Refinancing can take place both in the former creditor bank, and in any other.
It should be noted that not all banks refinance their own loans. On-lending programs for mortgage loans received from other banks are offered, for example, by Sberbank and VTB 24. Raiffeisenbank undertakes to refinance existing car loan obligations, taken both from itself and from other credit organizations. Uniastrum Bank offers such a service for credit cards and unsecured loans received from other banks by issuing its own credit card.
As a rule, the scheme for on-lending to individuals through another bank is as follows. The borrower draws up a loan in a new bank, which, in turn, repays the debt in the old one, transferring the amount of the debt there. The new loan may exceed the debt in the previous creditor bank, then the remaining part of the loan is used at the discretion of the borrower. If the loan is collateral, then the collateral is re-registered to another bank. Moreover, in this case, while the pledge is still in the old bank, the new one sets an increased interest on the loan, since the loan is unsecured at this time. As soon as there is a complete re-registration of the collateral, the borrower begins to pay the loan at a lower interest rate. This is done, for example, when refinancing a mortgage. If refinancing is carried out in the same bank where the loan was issued, then the collateral is not reissued and, accordingly, the borrower can reduce costs and save his time.
Refinancing a loan makes it possible to reduce the interest rate on a loan, increase its terms and change the amount of monthly payments, change the currency of the loan, and also, if the borrower has several loans in different banks, replace them with one.
Thus, if the borrower wants to improve the terms of the loan and reduce his repayment costs, he should first contact his bank with a request to lower the rate or use his own refinancing program, if available. If the bank does not have such a program and it does not want to reduce the rate, then you can search the market for a suitable refinancing program.
When choosing a new loan, it is necessary to compare the costs of obtaining it with the savings from lowering the rate. To do this, the borrower needs to find out if his old bank charges a penalty for early repayment, find out all the costs of refinancing at a new bank, and also calculate the difference in loan rates. It is not recommended to start refinancing if this difference is less than 2%.
The borrower should also find out if the bank has a moratorium on early repayment of the loan. If yes, then only after its completion, you can refinance the loan. If the loan agreement stipulates a ban on early repayment, you will not be able to refinance.
When refinancing a loan, the solvency of the borrower is assessed by the bank, as in conventional lending. He checks a person’s credit history and, if during the period of servicing a loan in a previous bank, he constantly had delays, he can refuse to refinance him. The borrower may also be refused if his financial situation has deteriorated since the receipt of the first loan.
Have you taken out a loan for an apartment or a car, but you can't pay it off on time, or have you found better loan terms? Do you need money to pay off an old loan and don't know where to turn with this problem? Can the most popular banking service, on-lending or refinancing, help you? And is there any point in applying for such a program to the bank?
Refinancing service: what is it
Many financial experts today are discussing the profitability of refinancing an "old" loan for a "new" one in another bank. Actually, this is the meaning of "refinancing".
This term, together with the program, came to us from the West quite recently. Here in Europe, for example, the loan refinancing program is so well-coordinated and beneficial for bank customers that every second person uses it. The whole world uses on-lending of various kinds of loans: from a consumer loan for the purchase of building materials to a mortgage loan. Also popular is the opportunity to close several loans with one and already repay only it, without spraying on many banks.
According to statistics, Russians use only proven loans, so refinancing has not yet taken root in our country. Many also believe that such a product does not justify itself at all. Our domestic programs initially introduced high requirements for the borrower. And today we are witnessing unstable and problematic financial practices in the country. It is worth dwelling on the problems in refinancing in more detail.
When Refinancing Is Necessary
Having dealt with the concept of "loan refinancing", as well as with the state of the program in Russia, it is important to understand when it can be useful to you.
1. The bank raised the rate on the loan, and with the new conditions, you simply cannot repay it. The way out for you may be a “new” loan with much more loyal rates.
2. You have a lot of small loans, so you often confuse repayment dates. But the refinancing program will help you not only pay off all small loans, but also provide you with the opportunity to repay one loan once a month.
3. If you are not satisfied with the relationship with the bank: service, aggressive policy, unstable financial situation, etc., then on-lending will help you change financial institutions.
All the pros and cons of refinancing a loan
Since the domestic banking market is only developing, it is clear that all the proposals of institutions do not always aim to help the client. Therefore, each "fresh" lending program is full of surprises for the future borrower. It is worth considering all options.
Benefits of refinancing
First, you lower your interest rate on the loan.
Secondly, you can increase the loan term and, accordingly, reduce the loan payment.
Thirdly, you can change the currency of the loan.
The Other Side of the Medal
Additional expenses. Your loan costs actually double: reinsurance, issuance fees, notary, property valuation, etc.
A large amount of time. Yes, you spend your personal time collecting documents and processing a new transaction.
Loss of the right to a tax deduction of 13% of the total amount of interest you have already paid. When buying an apartment, the state makes it possible to receive part of the interest back. Therefore, if you decide to refinance at another bank, first get a tax deduction, and only then change the lender.
Underwater rocks
A prerequisite for obtaining another loan is the bank's permission for a new loan, and in the case of refinancing, also the right to mortgage a "second" hand, i.e. in the course of the transaction, the burden of the "new" bank will also be imposed on your collateral. And after the repayment of the "old" loan, there will be only one thing left - your new lender.
But such permissions are simply not profitable for many banks, if you are a good borrower, you have a positive credit history, then the institution simply does not want to say goodbye to you. Yes, and many organizations do not undertake to refinance a loan if the client had delays on it, or the borrower had several consumer loans, or the amount in the sales contract was artificially low. If there are many minor owners involved in the transaction (participation), then you can easily be denied refinancing. True, they will not tell you the real reasons for the refusal.
Tips: on what figures refinancing is justified
Financial experts warn that if the interest rate on the "new" loan is 2% less than in the "old" bank, and there are only three years left until the end of the loan term, then it makes sense to refinance in another bank.
In calculations, it looks like this. If you reissue a loan of 4 million rubles from 13% to 11% per annum, and the repayment period is up to 15 years, then the overpayment on the loan will be very high. And for all 15 years, monthly 5,145 rubles. can turn into 1 million rubles of overpayment. Therefore, even a 1% reduction in the rate will give you a savings of 468 thousand rubles.
And if you don’t see such a benefit, and the refinancing costs are higher than 50 thousand rubles, and the rate cut does not save you even 2 thousand rubles, then refinancing simply turns into an unprofitable deal for you.
Hello, dear readers of the online magazine "site"! Today we’ll talk about what loan refinancing (on-lending) is, how to do it correctly and which banks are involved in refinancing loans from other banks (the best offers of 2019 are given in the corresponding section).
After reading the article from beginning to end, you will also learn:
- What loans can be refinanced;
- Is it profitable to refinance a consumer loan;
- For what reasons can banks refuse to refinance.
At the end of the article, we traditionally answer frequently asked questions on the topic under consideration.
The presented publication is worth studying not only for those who plan to refinance a loan in the near future. The information contained in the article will be useful to anyone who seeks to improve the level financial literacy. So do not waste time, start reading right now!
What is refinancing (on-lending) of a loan and how to apply for it, as well as where you can refinance a loan from another bank - in our new issue
1. What is loan refinancing - an overview of the concept in simple words
Term « refinancing" formed from 2 -x words: re – repeated, financing – provision of funds on a paid or free basis.
What does loan refinancing mean?
Loan refinancing - this is the execution of a new loan, in order to repay the current one on more favorable terms for the borrower.
This procedure is also called on-lending. Simply put, refinancing is taking out a new loan to pay off an old one.
From a legal point of view, a loan issued in the course of on-lending is targeted. This is due to the fact that the contract must indicate that the funds provided are used to pay off the debt owned by another creditor.
In most cases purpose of refinancing is a decrease ↓ of the interest rate. Most often, such measures are resorted to by those who have issued a loan for a long time.
Let's give an example : Borrower in 2013 took out a loan for a large amount at a rate 25 % per annum. IN 2019 year another bank offered him a loan under 12 % . At the same time, until the end of payments on the current loan, there are still about 6 years.
The borrower decides to refinance. This allows him to significantly reduce ⇓ amount of monthly payments and correspondingly, overpayment on loan.
2. Which loans are eligible for refinancing?
Competition in the lending market today is at a very high level. As a result, banks are forced to fight with each other for each client. This inevitably leads to better conditions for refinancing.
Today, the banking sector is characterized by the following changes:
- decrease↓ in interest rates;
- simplification of the procedure for repaying a refinanced loan (the bank independently transfers funds to pay for it);
- an increase in the terms for which on-lending is provided;
- softening the requirements of banks in relation to customers.
Modern banks allow the borrower to refinance the following types of loans:
- debts on debit cards in the form of an overdraft;
- consumer loans;
The possibility of refinancing a particular type of loan is determined by each bank individually. Therefore, before applying, you should familiarize yourself with the proposed conditions.
The period during which it is possible to repay a loan taken for refinancing is determined primarily by the type of debt paid with its help.
📝 For example, if carried out, you can count on a period within 30 years. If there is a refinancing consumer loan or car loan - the repayment period usually does not exceed 5 -10 years.
Refinancing in most cases allows the borrower to receive a range of benefits:
- improving credit conditions – reduction↓ of the rate, reduction↓ of the amount of the monthly payment and an increase in the term of payments.
- change in the currency of the loan;
- Consolidation of multiple loans into one loan in order to facilitate payments;
- release of property from collateral – if a car loan or mortgage can be refinanced without providing collateral.
❗ But you should keep in mind that refinancing is impossible if the current contract contains a reference to prohibition of early repayment.
If it is planned to refinancing , it is important to consider how much time has passed since the last refinancing. Some banks refuse to draw up a new agreement if the loan has already been refinanced before.
Also, lenders can set limits on the time elapsed since the on-lending. In most cases, you have to wait at least 12 months.
3. Is on-lending (refinancing) of a consumer loan profitable?
It has become more and more popular lately. The reasons for this lie in the ability to fulfill various goals without the need to make savings, For example, buy a car or real estate, meet household needs.
In a highly competitive environment, banks develop lending parameters that are very different from each other. Alone lenders attract customers with more profitable offers, other- ease of design. And often borrowers after receiving a loan realize that it turned out to be unprofitable. In such a situation, the question arises of refinancing .
✍ Take note!
Before agreeing to a loan, it is important to make sure that this procedure will indeed be beneficial. To do this, it is enough to calculate overpayment amount on a new loan and on an existing one and compare them. It is important to take into account not only interest rate , but also different commissions And insurance payments (if they are).
If in the course of the calculations it becomes clear that refinancing will lead to savings, you should estimate its size. If the amount turns out to be significant, there is no time to waste, it is best to proceed with the procedure in the near future.
Main stages of loan refinancing
4. How to refinance a loan at a lower interest rate - 5 main stages of on-lending
So, if a decision is made to refinance an existing loan, it is important to do it quickly, clearly and with greater profit. To do this, experts recommend using instruction with a detailed description of each step of the procedure.
Stage 1. Communication with the current creditor
On the one side, The legislation does not oblige the borrower to notify the lender of the intention to refinance. However, professionals recommend doing this anyway.
Banks are usually unwilling to let bona fide borrowers go. To keep them from intending to refinance at another bank, they may offer to change the terms of service. At the same time, the borrower Not only will pay the loan on more favorable terms, but will also carry out the procedure much easier and faster.
Stage 2. Bank selection
If, nevertheless, the bank in which the current loan is issued does not go to the meeting, you will have to refinance at another credit institution. Experts recommend approaching the choice as responsibly as possible.
First of all, you will have to compare the offers of several banks you like. You should study the information on their websites, reviews on the Internet on specialized sites and forums. If there is no time and desire for an independent selection of a lender, they will come to the rescue specialized comparison services , and ratings regularly compiled by experts.
When the bank for refinancing is selected, it is important to carefully study all the documentation regarding onlending posted on its website, including:
- rates;
- the presence of limiting conditions;
- list of required documents.
If you have any questions, be sure to get answers to them by contacting the bank employees. by phone call center or via online chat. Only when all the features of the procedure are clear, you can proceed to the design of refinancing.
Stage 3. Registration and submission of an application for loan refinancing
To apply for refinancing, in addition to statements you need to submit a package of documents to the bank. Each lender independently develops this list, but there are a number of documents that are almost always required.
What documents are needed to refinance a loan
The main documents for refinancing a loan include:
- passport of a citizen of the Russian Federation;
- salary statement ( 2 - personal income tax or in the form of a bank);
- a copy of the work book certified by the employer;
- documents on a valid loan - an agreement and a schedule for making monthly payments;
- certificate of the balance of the debt;
- details for transferring funds to pay for an existing loan.
In some cases, additional documents may be required, For example, receipts for payment of an existing loan.
Stage 4. Consideration of the application
After the application and the package of documents are submitted, the bank reviews them. Since refinancing, in fact, is the execution of a new loan, the period for consideration in most cases does not differ from that established for other types of loans.
On average, it takes 5 -10 days . But taking into account the decline ↓ recently average interest rate for loans, the number of applications for refinancing increased sharply⇑. This can lead to an increase in the processing time in popular banks.
Stage 5. Conclusion of the contract
If at the end of the review procedure the bank makes a positive decision, the final and most important stage begins - conclusion of an agreement .
☝ Surely everyone knows, but it will not be superfluous to repeat once again - Don't sign an agreement without reading it carefully.
When reading the contract, first of all, pay attention to the following parameters:
- the size of the interest rate;
- the total cost of the loan received;
- the procedure for applying and the amount of penalties;
- terms of early repayment;
- Is it possible to change the terms of the loan agreement unilaterally?
When studying a contract, it is important to remain vigilant from beginning to end, carefully studying absolutely all sections. If problems arise and any of the parties goes to court, the decision will be made exclusively within the framework of the signed agreement.
Thus, refinancing a loan is not as complicated as many people think. If you strictly follow the presented instructions, you will be able to avoid many difficulties and successfully refinanced in another bank at a lower interest rate .
5. Where can I refinance loans from other banks - the best offers this year
Refinancing services are offered by many Russian banks. However, the conditions of different lenders are very different. You can choose the best option by analyzing and comparing the conditions of several banks. Below we consider The best banks that refinance personal loans persons .
🏦 Which banks are engaged in refinancing loans for individuals - an overview of the TOP-3 banks
To simplify the task of choosing a lender, we provide a description 3's banks with the most favorable refinancing conditions.
1) VTB Bank of Moscow
VTB Bank of Moscow
is part of the VTB financial group and is engaged in the provision of retail services. The basis of the work of the division is the service of individuals.
In connection with the growing demand for on-lending, the bank has developed an appropriate loan refinancing program . The use of this loan product at VTB Bank of Moscow makes it possible to reduce↓ the loan burden by reducing↓ the rate.
Under the refinancing program, the percentage here is set individually and can be in the range from 11% to 17% per annum . At the same time, special conditions are provided for workers in the field of medicine or education, civil servants, as well as payroll clients.
2) Interprombank
Interprombank - Moscow financial institution, which was founded in 1995 year. The presented bank is a universal company and offers its customers a full range of banking services.
Individual lending is of great importance in the bank. That is why serious attention was paid to the development of a refinancing program in a credit institution.
On-lending at the bank allows customers to combine an unlimited number of loans. An important condition for this is that the total amount under refinanced contracts must be no more than 1,000,000 rubles . The rate is set from 12% per annum , and there are no additional commissions and insurance.
You can apply for preliminary consideration under the refinancing program on the bank's website. It also provides the ability to calculate the main parameters of the loan.
3) Sovcombank
To date, in Sovcombank
there are a large number of credit programs. They allow you to borrow from 5 000
before 30 000 000
rubles. The bet starts from 12
% per annum.
There is no special program for refinancing existing loans at Sovcombank at the time of writing. However, there is another interesting offer for citizens who find themselves in a difficult situation, called "Credit Doctor" . This loan is designed to improve your credit history.
To make it easier to compare the described offers, we have combined the main conditions for them in the table below.
Table: "TOP-3 banks with the best conditions for on-lending to individuals"
| Credit organisation | How many loans can be combined | Loan amount | Loan terms | Bid |
| VTB Bank of Moscow | Up to 6 loans and credit cards | From 100 thousand to 5 million rubles | For salary and corporate clients - up to 7 years, for the rest - up to 5 years | If the loan amount is up to 500 thousand rubles, from 12 to 16% per annum If the amount is from 500 thousand to 5 million - 12% per annum |
| Interprombank | Any number of loans with the ability to receive part of the funds in cash | Up to 1 million rubles | From six months to 7 years | From 12% per annum |
| Sovcombank | Currently, refinancing is not provided, the program is Credit Doctor | 4,999 or 9,999 rubles | 3 to 9 months | 33.3% per annum |
* For current information on refinancing loans received from other banks, see the official websites of credit institutions.
6. What you need to consider before you refinance in another bank - 5 important points
Many people think that the choice of a bank and a thorough study of the conditions for refinancing, refinancing ends. But experts recommend not to rush. In order for refinancing to be as profitable as possible, you should once again pay attention to several important points.
Total overpayment
Information about interest rates for many is not visual. Therefore, experts recommend first of all to produce calculation of the amount of overpayment in rubles. This does not require financial knowledge. Enough to take advantage special calculator .
There are a lot of programs for making calculations on the Internet today. The essence of their action is approximately the same. It is enough to indicate amount, term And bet on the loan being processed to find out what will be overpayment And monthly payment .
If the results of the calculations of the bank and the calculator differ significantly, it is worth asking the experts what this is connected with. Such actions help to understand whether any hidden fees.
Terms and conditions for fines
When applying for a loan, borrowers are usually confident in their abilities and think that they will never have delays. Unfortunately, no one is immune from financial difficulties or unforeseen situations.
‼ In order not to be shocked in case of unexpected delays, it is important to carefully study the section of the contract regarding fines, even before signing .
On the one side, Only fines for violation of credit obligations are provided by law. On the other side, there is a universal clause - unless otherwise provided by the contract.
Using this fact, banks often additionally establish a fixed amount of the fine . Moreover, some creditors are for persistent defaulters increase ⇑ the amount of the penalty for each missed payment.
In order not to have to overpay additionally, it is first of all necessary to fulfill the obligations assumed in a timely manner and in full.
If the violation was nevertheless committed, you can try to return a fixed fine. To do this, you should apply with the appropriate application directly to the bank. If the creditor refuses to recalculate, for the protection of legal rights, you must go to Rospotrebnadzor .
Interest rate
Most borrowers, when choosing a refinancing program, first of all pay attention to the proposed rate. Earlier we have already told why this characteristic is not quite indicative. However, for an initial comparison, the interest rate is quite suitable.
Today, in the market, rates for refinancing programs differ significantly in different banks - they vary from 9 to 23% per annum . But it should be understood that not always a loan at a lower interest rate is the most profitable.
When comparing, it is important to use not only annual, but also effective interest rate . It is this indicator that allows you to calculate the full cost of a loan for refinancing and correctly assess the profitability of the program.
Effective interest rate represents the real cost of the loan, which takes into account all fees and charges applicable under the contract.
Many banks lure the client with supposedly profitable offers. Only with a detailed study of the effective interest rate does it become clear whether this or that program is really beneficial.
Availability and value of additional commissions
When choosing a refinancing program, you should also pay attention to the presence in the contract of information about various additional commissions . Most often, such payments mean loan application fee, opening And maintaining a credit account, consideration of the application and others.
It is important to understand that such commissions by law prohibited . Moreover, there is already a lot of jurisprudence on this issue. However, some banks still mislead borrowers.
Basically, clients have every right disagree with certain clauses of the contract relating, for example, to illegal commissions. However, in this case, there is a high risk that the refinancing will be refused, or the loan will be issued at a higher rate.
☝ Experts recommend those who met with the requirement to pay various commissions, sign an agreement on the terms of the creditor. When the transaction is concluded, and the money is received, you must write to the bank claim . In such a document, it is necessary to state the facts of violation of the law and put forward a demand for the return of funds that went to pay for the services imposed by the creditor.
It is important to remember that loan servicing is not a service that clients need. On the contrary, it is the duty of the creditor. Practice shows that having received a claim, banks usually return funds without any problems. Lenders do not want to bring the case to court, as they know well that the law is on the side of the borrower in this matter.
Possibility and conditions of early repayment
Not only refinancing the loan helps to reduce the overpayment. Of great importance in any loan agreement is the ability at any time without limitation to make complete or partial early repayment .
🔔 When studying the contract, it is important to pay attention to the algorithm for early repayment.
All conditions for the implementation of the procedure in question must be clearly stated in the agreement. This concerns, first of all, how many days in advance and with what document the borrower must notify the bank of his intention to repay.
At the same time, it should be remembered that the lender does not have the right to establish fines and commissions for early repayment. However, in some cases, temporary restrictions may be provided - a moratorium for several months.
If you take into account all the points described above, the refinancing procedure will be the most profitable.
Refused to refinance: the main reasons
7. Why banks may refuse to refinance a loan - 3 main reasons for refusal
Experts warn those who have decided to refinance loans: in this area, the probability of failure is quite high . Banks usually do not notify borrowers why they make a particular decision. However, there are a few key points that most often lead to failure.
⛔ Reason 1. Delays on any loans
No lender wants to deal with unreliable clients. That is why, if you apply for refinancing in the presence of existing delays, the application will be refused.
If a borrower with delays in making payments still wants to refinance, he will first have to pay off all the delays. After that, for several months usually at least 3 -X) payment must be made on time. This approach helps raise chance of approval of the submitted application .
By the way, the likelihood of approval increases if the borrower provides the bank additional security . It could be liquid property as collateral or solvent co-borrowers or guarantors.
Another way to resolve a problem in a difficult situation is to seek help from credit brokers . At the same time, it is important to carefully choose a partner company so as not to fall for the bait of scammers.
⛔ Reason 2. Damaged credit history
Most banks without fail, when considering the possibility of drawing up a refinancing agreement, pay attention to the reputation of the borrower.
At its core credit history represents information on how an individual fulfills its credit obligations.
It accumulates in BKI (credit history bureau). The retention period for this information is 15 years.
In order to quickly find out which of the numerous BKIs the borrower's financial history is located in, you need to know yours. How to find out, we described in detail in a previous article.
With the consent of the potential borrower who applied for a loan, the bank has the right to request information from the CBI. Having studied them, the creditor makes a decision on the issuance of funds or refusal ( both for traditional credit and for refinancing).
It is quite natural that if there is negative information in the BCI, the bank will most likely make a negative decision on the submitted application. To avoid this, experts recommend that borrowers find out what information is contained in their credit history, in advance.
You can get information about your credit history using several methods:
- apply to the bank with a corresponding request;
- independently send a request to the Credit Bureau;
- request relevant information on the website of the Central Bank of Russia;
- use the services of a specialized site.
⛔ Reason 3. Too short term of the refinanced loan
It takes a certain time for the bank to be convinced of the responsibility, as well as the solvency of the client. That is why, when considering an application for refinancing, lenders enter restrictions on the term of the loan to be renegotiated.
In most cases, you will have to pay it on time at least 3 months . Some banks require an even longer minimum term - from six months .
Knowing the main reasons for refusal to refinance, borrowers can decide for themselves how appropriate it is for them to apply at the current time.
8. Frequently asked questions (FAQ) on refinancing
The growing popularity of refinancing loans has led to the fact that many borrowers have questions about the features of this procedure. So that you do not waste time looking for additional information, we answer the most popular ones.
Question 1. Is it possible to refinance a loan without a certificate of income (without proof of income)?
The list of documents for refinancing a loan issued by another credit institution in most banks contains income statement . At the discretion of the creditor, it can be drawn up in the traditional form - 2 - personal income tax, and in the form of a bank.
However, some banks offer individuals to refinance without confirming their income.
It's important to keep in mind what in this case terms may be less favorable. First of all, it concerns a higher interest rate.
Moreover, it will not work to refinance a loan without informing the bank of the amount of your income at all. The application for on-lending must contain information about the amount of income, as well as about the employer and the position held. Although there is no need to document this information, it is used in the consideration of the application.
Question 2. What is real estate loan refinancing?
Refinancing secured by real estate is, in essence, a regular refinancing, subject to participation in a collateral transaction.
Such a scheme can be used to withdraw from the encumbrance of an object purchased with a mortgage with its replacement for another. This may be necessary when the mortgaged property needs to be sold.
On-lending secured by real estate
Refinancing secured by real estate has the following advantages:
- allows the borrower to rely on a much larger loan amount. You can combine several consumer loans in size comparable to a mortgage;
- significantly increase the likelihood of your application being approved.
At the same time, it often does not matter for the bank where the funds received will be directed - to repay current loans or for other purposes. In this case, the pledge acts as a kind of guarantor. If the borrower refuses to pay, the bank will sell the property received as security and return its money.
P.S. In one of the articles in our magazine, you can read an article on how to do without proof of income.
Question 3. Is it possible to refinance an overdue loan (overdue debt)?
📣 Experts warn: get a positive decision on the application for refinancing in the presence of overdue debts almost impossible . This is due to the high risk of lending to such borrowers.
However, in some cases the bank that issued the overdue loan, goes to the borrower to meet. If there is a refinancing offer in the lender's product line, they may agree to provide it to their client. But you should be prepared for the fact that the bank may require additional collateral - surety or pledge .
In fact, refinancing is primarily intended not to solve problems with overdue debt, but to improve the terms of payments. If there is nothing to pay the loan, you should pay attention to other possibilities - or bankruptcy .
Question 4. How to apply for loan refinancing?
You can complete and submit an application for refinancing, contacting the bank office where the procedure is to be performed, or, by visiting his website.
For preliminary consideration, it is enough to indicate the basic information:
- surname, name and patronymic;
- passport data;
- addresses of registration and residence;
- contact details - phone numbers;
- requested loan amount.
In case of filing online applications for loan refinancing the resulting solution will be preliminary . That is, approval does not guarantee the execution of a loan agreement.
For further consideration, it is necessary to provide the bank with the necessary documents. Only after their analysis will be issued final decision .
Question 5. How to calculate loan refinancing?
To make sure that refinancing will be really profitable, it is important before signing the contract calculate the main parameters of the procedure. It's almost impossible to do it manually.
Nevertheless, to carry out calculations in just a few minutes is within the power of everyone. To do this, it is enough to use any specialized calculator .
Today, their choice on the Internet is quite extensive. But the principle of operation is almost the same.: just enter the main parameters of the loan in the fields - bet, size And term in order to find out in just a minute what the amounts of payments and overpayment will be.
9. Conclusion + related video
Recently, the popularity of refinancing in Russia has been continuously growing. Many citizens took out loans during the crisis at very high rates. Today, against the backdrop of a reduction central bank the key rate, there is a decrease ↓ interest on loans.
In such a situation, the desire of citizens to make the conditions for servicing their obligations more profitable is quite natural. For this purpose, you can use refinancing loans .
Refinancing helps not only cut ↓ bet , but also reduce ↓ payment amount And overpayment . The result is an improvement in financial well-being.
In conclusion, watch a video about why a bank needs refinancing loans and what are its benefits:
That's all for us, but the team of the site "RichPro.ru" does not say goodbye to you!
A loan can be made less onerous by lowering the interest rate and the monthly payment. This opportunity arose because the Central Bank is lowering the key rate - the one at which it lends to commercial banks. The lower the rate for the bank, the lower the rate for you. Therefore, mortgages and consumer loans are getting cheaper. In December 2014, the key rate reached 17% On the key rate of the Bank of Russia and other measures of the Bank of Russia, and on February 9, 2018 fell to 7.5% The Bank of Russia decided to cut the key rate by 25 bp to 7.50% per annum.
If you took out a loan just at the moment when the rates were maximum, then now you can refinance it.
What is loan refinancing
Refinancing is getting a new loan to pay off an existing one. At the same time, a new loan is issued on more favorable terms (the rate is reduced). Due to this, you can:
- Reduce the monthly payment (while maintaining the loan term).
- Reduce the loan term (while maintaining the loan burden).
- Get additional funds to the existing loan (the monthly payment will not increase).
Do not confuse refinancing and restructuring - revising the terms of an existing loan. Refinancing is needed in order to save money, restructuring - to reduce the credit burden if you cannot repay the debt. In the first case, you can apply to any bank, in the second - only to the one where you took the loan.
You can refinance multiple loans at once. For example, you have a car loan and credit card debt. They are combined into one, make a common payment and one bet. Now you pay only once for one loan instead of several payments to different banks. Some banks refinance up to three loans, some up to five. Everything depends on the conditions.
You can refinance a loan in the same bank where you took it, but there is a chance that you will be refused. The bank does not need to reduce the interest on the loan and lose profits. In this case, refinance the loan in another bank. Choose the one that offers you the best conditions.
It works like this. You submit an application for refinancing. It is approved, and the new bank transfers the amount of your debt to the old bank where you originally took the loan. You write an application for early repayment in the previous bank, receive a certificate of closing the loan and transfer it to the new bank. After that, pay the loan as usual, only to another credit institution.
What loans are refinanced
You can refinance any loan: consumer, car, mortgage, credit card, debit card with overdraft. But not all banks offer such a choice, some only work with consumer and auto loans.
There are limits on the amount, but each bank has its own conditions. Not all banks refinance foreign currency loans.
Banks only refinance loans for which the applicant regularly pays. The service may be denied if you have been late with payments for the last 6-12 months.
The bank does not want to deal with unreliable customers who will delay payments or not pay at all. Therefore, you must have a good one.
Another requirement: the loan must not be new (you took it at least six months ago) and must not expire in the next 3-6 months.
When do you need to refinance a loan?
1. If you have multiple loans
The refinancing procedure will make one loan out of several loans with a single payment and a single interest rate.
2. If you took out a mortgage at a high interest rate
Previously, the average mortgage rate was 12-15% per annum, in October 2017 it dropped to 9.95%. In this case, refinancing is beneficial, because it is still a long time to pay and a rate cut of even 1.5% will allow you.
3. If you have a foreign currency mortgage or a foreign currency loan
Due to the growth of the dollar and the euro, foreign currency loans have become burdensome instead of profitable. With the help of refinancing, you can lower the interest rate, reduce the amount of the monthly payment, or make the loan ruble.
4. If you need available funds for an existing loan
When refinancing a loan, you can additionally ask the bank for a certain amount. As a rule, it is 50-100 thousand rubles. It is assumed that the monthly payment will not increase due to the rate cut, although the loan term may increase.
5. If you want to reduce the monthly payment, but are ready to pay off the loan longer
This is not the best measure: with an increase in the loan term, you will pay the bank more interest, which means you will overpay. But if you understand that it is difficult for you to pay, you can refinance it: the interest rate will be lower, the monthly payment will decrease, and the repayment period will increase.
What to pay attention to
If you have paid off most of the loan, then you should not refinance it. Even if your interest rate on the loan decreases, most likely you will not win.
This is because the interest on the loan is paid first, and only then the principal amount. If you refinance a loan, you will pay interest again instead of repaying the principal.
If you took a loan for five years and you have 1.5–2 years left to pay, you should not refinance it.
When refinancing a mortgage in a new bank, additional costs appear: for real estate appraisal, for certificates from the BTI and the house book, for paying for notary services.
Additional expenses will also arise for reinsurance. If you refinance your mortgage or at another bank, you will need to take out a new insurance policy or renew the old one (if your insurance company is accredited by the new bank). The amount of insurance can increase by several thousand a month, which means that the benefit from refinancing will decrease or disappear altogether.
Before using refinancing, calculate loan payments at a new percentage, taking into account additional costs.
If you refinance a loan in the same bank that issued it, there will be less. Therefore, if your bank refuses to refinance you, get approval from another credit institution. With this decision, go to your bank again and ask to refinance the loan again. This will show the seriousness of your intentions, and the service may be approved. Otherwise, the bank will lose a client, and this is unprofitable for him.
Also keep in mind that when refinancing, the loan term may increase. The bigger it is, the worse it is for you. In seven years, you will pay more interest than in five, even if the rate on the first loan is lower.
If you refinance a loan, it is better to keep monthly payments at the same level: this way you will shorten the loan term and pay less interest to the bank, and also get rid of the loan faster.
Before applying for refinancing, check the details: is there a commission for refinancing, for transferring funds from a new bank to an old bank, a penalty for early repayment of a loan in an old bank.
For example, if you refinance to close five loans in different banks, then you may be charged five times a commission for transferring money or fined five times for early repayment.
You will receive exact figures only at the bank branch by submitting an application for refinancing. Approximate data can be obtained using online calculators.
Let's say you took 500,000 rubles for three years at 24% per annum, the calculation scheme is annuity (the same amount of payments every month). In three years, you would give the bank 706,191 rubles.
After a year of payments, you decided to refinance this loan (12 payments have already been transferred, for the year you gave the bank 235,392 rubles, the balance of the debt is 371,024 rubles). For this amount, you need to calculate the refinancing.
Bank X offers you refinancing at 19% per annum for two years. Enter this information into the calculator. The monthly payment will decrease from 19,616 rubles to 18,651 rubles. In two years, you will pay 447,629 rubles on a new loan.
Before that, you have already paid 235,392 rubles to the former bank. It turns out that in total you will give 683,021 rubles. If they had paid on the old loan, they would have given 706,191 rubles. The total benefit will be 21,170 rubles.
This is a benefit without taking into account possible commissions and additional costs. You need to check with your bank about them.
What documents will be needed
To refinance a loan in a new bank, you need to collect a standard package of documents:
- Passport.
- The second identity document (TIN, SNILS, passport, driver's license, debit or credit card of any bank, compulsory medical insurance policy).
- Certificate of income 2-NDFL.
- Credit agreement.
- Statement.
The bank may require additional certificates to confirm the information.
Results
Refinancing is a good banking service. With its help, you can pay less to the bank, but it is important to use it wisely.
- It is profitable to refinance a mortgage if the rate is at least 1.5% lower.
- Refinance only those loans on which most of the interest has not yet been paid.
- Try not to increase the loan term: you will pay less per month, but in the end you will give the bank more.
- Be sure to calculate the refinancing of loans, taking into account additional costs and commissions.
On-lending of non-purpose loans is a rather demanded service of commercial banks, because it provides borrowers with the opportunity to reduce the financial burden on the borrower's budget. In addition, banks are actively promoting a financial product because it can be used to close several loans at once, plus get cash for consumer needs, and at the same time, monthly payments will be lower. But in fact, is refinancing a consumer loan profitable, and if so, which commercial bank offers the best conditions.
About the service
The essence of this program is that the borrower takes a new loan to pay off his obligations in another bank. That is, the bank that conducts on-lending allocates funds for a specific purpose - the repayment of loans. And the main advantage of the product is that the size of the monthly refinancing loan payment is less due to an increase in the loan term and a decrease in the interest rate.
Banks carry out on-lending under certain conditions. For example, if you have several loans in different banks, then you can combine them into one and pay only one bank. At the same time, the bank has a number of requirements both for the loan and for the borrower himself. In particular, the requirements may relate to the term of the refinanced loan, for example, at the time of refinancing, the payer must already repay part of the debt.
Please note that most banks have a single requirement for all borrowers - this is the absence of overdue debt on current obligations.
Refinancing loan process
As for the lending process itself, it is quite lengthy and troublesome. The process begins with the preparation of documents. Insofar as the borrower draws up a bank loan, he needs to prepare the maximum package of documents, including a certificate of income and a document confirming employment.
There is another significant nuance, if the borrower refinances a consumer loan with collateral, then the bank may require collateral for the loan for refinancing. That is, the pledge and guarantee of individuals will again act as a guarantee for a new bank loan, and, accordingly, the relevant documents must again be prepared for the object of pledge and guarantors.
In general, the on-lending process will look like this: you first choose a bank that provides the service, then collect documents and submit an application. In case of a positive decision, you will have to contact the lender in order to apply for early repayment of your loan, you definitely need to find out the exact amount to pay off the debt and interest, you will need this information to apply for a refinancing loan.
In the future, you will need to sign a loan agreement with another bank and pay off your existing debts. Here, events can develop in different ways, either the new lender will transfer the borrowed funds to pay off the debt, or the existing obligations will be closed by the borrower himself after receiving the cash, and then provide a document confirming the intended use of the funds.
Important! If the allocated funds under the refinancing program were not used for their intended purpose, the new lender will raise the rate.
Beneficial or not
If we talk about whether it is profitable to refinance a consumer loan, then the question is ambiguous. To be more precise, the benefit will depend on several factors:
- the interest rate of the loan for refinancing and the total cost of the loan;
- loan term;
- the amount of the monthly payment;
- insurance conditions.
That is, when choosing a proposal that is beneficial for you, you should first of all pay attention to the percentage that the bank offers as part of the consumer loan refinancing program. Among other things, it should be borne in mind that the interest rate does not determine the full cost of the loan, because the lender charges an additional fee for their services, including opening and maintaining a credit account. Therefore, first of all, ask the loan officer what is included in the full cost of the loan, and what annual percentage will be valid in the end.
Next, you should pay attention to the loan terms, because the longer the loan term, the more you will overpay the bank. Before applying for a new loan, ask a loan officer to create a preliminary payment schedule for you and compare the amount of overpayment on current obligations and on a loan for refinancing. The fact is that refinancing is unlikely to be profitable if you overpay on it more than on existing loans.
No less important for the borrower will be the amount of the monthly payment. As a rule, if you use a loan for refinancing, it means that you have to pay a smaller amount every month, otherwise it will be inappropriate to refinance. By the way, do not forget that all banks insistently offer to take out personal risk insurance in an accredited company or subsidiary. You can cancel the insurance policy, but the bank may increase the annual percentage. And if you agree, you will have to pay for the policy at a time for the entire loan period.
Advice to borrowers! If you repaid a bank loan ahead of schedule through on-lending, you have the opportunity to return part of the insurance premium for the period during which you did not actually use the borrowed funds.
Program selection
Many commercial banks provide this service on different terms. To understand in which bank refinancing a loan is more profitable, it is worth comparing several offers. Namely, to review offers, rates and requirements for borrowers.
Rosselkhozbank
Here you can refinance a consumer loan. Loans from other banks are subject to refinancing for a total amount of up to 750 thousand rubles without collateral and up to 1 million rubles with collateral or surety. The maximum term is up to 60 months. As for other conditions, the client has the opportunity to choose a debt repayment scheme: annuity or differentiated payments. At the time of application, the loan repayment period in another bank must be at least 1 year from the date of the first payment without delay.
As for the interest on the loan, the minimum value is 12.9%, which increases depending on the term of the agreement and the category of the borrower. Favorable conditions can be obtained by employees of state institutions. The base rate increases by 6 points in case of cancellation of insurance.
VTB 24
The bank can refinance up to six loans opened in other financial institutions. The interest rate is from 13.5% per year, with the amount of debt above 600,000 rubles and from 14 to 17 percent with an amount of less than 600 thousand rubles. The maximum loan amount is up to 3 million rubles, for a period of up to 60 months.
The nuance of the service is that with the help of this program you can choose two options: reducing monthly payments by increasing the loan term, or reducing the total overpayment by reducing the term of the contract. In addition, you can borrow an additional amount of funds for personal needs.
The Bank does not refinance loans from banks belonging to the VTB financial group.
Intercommerzbank
Here, loan refinancing is carried out on the following conditions: the rate is from 12%, the term is up to 5 years, the amount is up to 1,000,000 rubles, the number of loans is not limited. That is, here you can take one loan to pay off any obligations to banks, plus receive additional funds for personal needs.
As you can see, different commercial banks offer similar conditions for on-lending. That is, interest rates are not much different from ordinary consumer loans. The most profitable refinancing of a consumer loan will be subject to certain conditions that were listed above. But in addition, the borrower can make on-lending even more profitable for himself:
- Contact the bank where you are already repaying the loan, many lenders meet the needs of respectable borrowers and can continue another loan with a lower interest rate, or extend the term of the agreement to reduce the financial burden.
- Before refinancing your loans, calculate the difference in payments and interest rates, perhaps there is no point in refinancing.
- Carefully study the terms of refinancing, banks may include commissions and various kinds of payments in the cost of the loan, which makes refinancing unprofitable for the borrower.
Thus, to summarize, the refinancing service is far from always profitable and appropriate for the borrower. If you are already paying a loan on favorable terms with an acceptable interest rate, then changing the loan is pointless. Refinancing will be really profitable only on condition that the rate on the current loan exceeds 25% or more.
