Pensioners receive an old-age pension or an early pension after leaving their working life early. Debt rescheduling means replacing existing loans with a single new loan. It makes sense if the pensioner pays lower interest after the debt rescheduling than for the existing loan agreements and the savings are higher than any prepayment interest that may have to be paid. In addition, debt restructuring offers itself to retirees if the previous lender refuses an urgently needed extension of the contract term.
Where do pensioners apply for debt restructuring?
A debt rescheduling is more likely to be obtained for pensioners than a new loan, since the fundamental check of their creditworthiness was carried out when the loan was first granted. Some financial institutions offer discounted loans to pensioners who use them to reschedule existing loans. As usual with debt restructuring, the new lender does not pay the loan amount to the customer, but transfers the individual amounts to be paid directly to the previous creditors.
Money transfer by third parties is not always possible with credit card accounts, in which case the new lender will exceptionally pay the corresponding partial amount to his customer. When it comes to debt rescheduling, pensioners are in a stronger negotiating position than taking out new loans with the bank. If they are not offered debt rescheduling on attractive terms, they can continue to run their existing loans.
Which loans should be included in the debt restructuring?
In principle, all existing loans, including the overdraft facility used, should be included in debt rescheduling. An exception only applies to interest-free loans, such as those offered primarily by traders. When calculating the desired term, pensioners make sure that they can pay the due loan installments without having to use the overdraft facility again.
Before deciding on a specific debt rescheduling loan, pensioners compare the offers of various banks, with the right to free special repayments being important in addition to low interest rates. Taking out credit default insurance often leads to reduced interest rates for debt rescheduling. Insurance makes economic sense if its costs are lower than the interest savings.