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For most entrepreneurs, saving costs is a plan that accompanies you day and night. In purchasing, prices have to be renegotiated, production has to be more effective, in sales, expenses for business trips and overnight stays have been reduced. However, the cost of loans is often not so much in focus because you have little to do with the immediate value creation process of the company. But here, for example, strategic debt restructuring offers valuable optimization potential that many companies have not yet fully exploited. Debt restructuring can effectively reduce long-term borrowing costs, and given the persistently low interest rates, now is the right time to replace expensive financing with cheaper loans. But how do you best deal with debt restructuring?

Not every loan can be rescheduled

Not every loan can be rescheduled

Before you take a closer look at replacing expensive financing, it is worth taking a look at the current loans. If the stated goal is to save costs, you would probably want to exchange any expensive financing for a cheaper option. In principle, this is of course possible, but some loans are easier to repay than others.

The overdraft facility is usually a very expensive loan. It is also known as an overdraft facility or overdraft facility. A current account credit is an overdraft facility that the bank has granted for the business account. A credit line of around one month’s turnover is usually granted for small and medium-sized companies. Deviations are possible and can be negotiated individually between the bank and the entrepreneur.

However, the interest on an overdraft facility is very high compared to other loans. The ongoing low interest rate phase has not changed anything, because many banks still charge their customers overdraft rates in the low double-digit percentage range. Although the interest to be paid is only calculated for the period in which the loan is actually drawn, the cost of the loan quickly becomes a considerable order of magnitude, especially when the credit line is high. Regardless of the serious interest, a bank overdraft is usually easy to reschedule and replaced by a cheaper option. The excess credit line is then settled on the desired date, and repayment of the inexpensive loan begins at the agreed time.

Even a classic installment loan is usually quite easy to reschedule. Around ten years ago, a company had to pay much higher interest rates for such financing than today. With a remaining term of three to five years, it is definitely worth thinking about rescheduling. However, one has to reckon with the financing bank demanding compensation for the lost interest. This compensation is also known as prepayment penalty. It is best to add the prepayment penalty to the remaining debt and to take on the new loan with the sum of the remaining debt and compensation. This leaves the existing liquidity untouched. However, as an entrepreneur you are well advised to take a closer look at the amount of the prepayment penalty. It increases with the remaining debt and the loan amount. If the bank sets it disproportionately high, a renegotiation may be worthwhile.

Rescheduling loans and optimizing financing is worth it!

Rescheduling loans and optimizing financing is worth it!

However, rescheduling a real estate loan is usually quite difficult. A replacement for the expiration of the interest rate fixation is often possible. Such financing can often only be replaced beforehand if the property is sold. If the bank nevertheless agrees to reschedule a real estate loan, a prepayment penalty is incurred. This can be considerable with a long remaining term or with a high remaining debt and should definitely be taken into account when checking whether a debt rescheduling makes sense.

Agony for the entrepreneur: Checking the existing loan

Agony for the entrepreneur: Checking the existing loan

If it is planned to replace existing financing, every entrepreneur should first carefully examine the current loan agreement. As a rule, the modalities under which debt restructuring is possible are listed here. The contract for a real estate loan usually also states whether early repayment is only allowed at the end of the borrowing period or whether a sale of the property is necessary for a debt rescheduling. Those who are unsure whether the old contract enables debt restructuring are best advised to contact the financing bank. There you should inquire about the exact requirements and inquire about the prepayment penalty. If this is asserted by the bank, it is best to request a current status of the remaining debt including the prepayment interest. On the basis of the sum determined in this way, it must then be checked whether rescheduling makes sense. But how do you go about it?

In this case, a loan repayment is worthwhile

In this case, a loan repayment is worthwhile

If a company wants to cut costs, it can focus on the amount of interest when weighing up the advantages and disadvantages of debt restructuring. Other aspects such as a trusting relationship with the house bank, good advice from the responsible clerk or the term of a financing may then be disregarded. If the entrepreneur focuses solely on the comparison of interest, the following relationship applies: If the total interest on the new loan is less than the interest on the old financing, rescheduling is recommended. So if you are thinking of repaying a current loan, you should look at the new and the old interest rate on the one hand, and also compare the sum of the interest still to be paid on the other. If the interest payment for the rescheduled loan is lower than the old interest payment, rescheduling is recommended. You can find a cheap loan by comparing interest rates.

How to do a loan comparison

How to do a loan comparison

Good and inexpensive financing for a suitable debt change can usually be found online. With the help of an internet comparison, the interest rates of the individual banks can be compared quite well. A good comparison calculator requires only a few details to request current banking offers and to put them together in a compact overview. The comparison also reveals other conditions such as the possibility of making free special repayments or interest-free total repayments. This gives the borrower all of the essential criteria that are important for the loan comparison. He can concentrate on the providers whose offers are tailored to his needs.

Many comparison calculators can be set using individual filters, so that, for example, you can only see the offers for which an immediate payment of the loan is possible or for which flexible repayments can be agreed. Even providers with interest independent of creditworthiness can easily be identified from a good comparison calculator. By the way, a good credit rating is always important when a company is looking for a cheap loan.

Creditworthiness plays a major role for low interest rates

Creditworthiness plays a major role for low interest rates

Creditworthiness is the creditworthiness of a borrower. It stands for its ability to meet the payment obligations as agreed over the entire term of the financing. Many banks calculate their interest based on the creditworthiness of the entrepreneur. This means that a financially sound company can expect lower interest rates than a company that has to struggle temporarily with liquidity shortages. Before a lender agrees to a financing application, he will take a close look at the creditworthiness of his potential customer. It is therefore particularly important for entrepreneurs to know the factors that influence creditworthiness and to know how banks assess their own creditworthiness. Ideally, a company checks the individual creditworthiness very carefully before those responsible place the order to initiate debt restructuring.

This is how you improve your own creditworthiness

This is how you improve your own creditworthiness

At bankate, companies have the opportunity to view all data that is stored at the credit bureaus and that affect their creditworthiness. Here incorrect information can be corrected and missing information can be added. If a debt rescheduling is planned in the foreseeable future, bankate provides essential information as to whether there is a need to optimize creditworthiness. If this is the case, the entrepreneur can immediately take action online and make the desired corrections. In this way, the correct and up-to-date data create the conditions for attractive banking offers at favorable conditions. But bankate offers an entrepreneur even more services.

Tailor-made offers depending on your credit rating

Tailor-made offers depending on your credit rating

bankate gives entrepreneurs the opportunity to request individual offers for financing that are tailored very precisely to their creditworthiness. With conventional online platforms, the applicant’s creditworthiness is often only taken into account to a very limited extent. The financing bank only issues the loan approval after a thorough examination of the documents, whereby the borrower can expect worse conditions if his credit rating leaves something to be desired. At bankate it is different. Only a few details are sufficient to prepare an offer for a planned debt restructuring that is tailored precisely to the creditworthiness of the company. This makes it easier to compare the conditions of the lenders, and as a borrower you immediately know exactly what the financing will cost in the end. Such a well-calculated offer makes a significant contribution to quickly deciding whether to stick to old financing or whether debt rescheduling is a better choice.

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