When debts are out of control, many citizens think about refinancing a loan. Considering that the debts of the average citizen of Croatia are around USD 67 thousand, it is no wonder that many want to consolidate their debts with a single loan. And that is exactly what is behind the term refinancing of loans. It is a popular method for Croats who have already become true wizards when it comes to living on debt. Considering that the average consumer basket exceeds the average Croatian salary, citizens have had to manage to stretch their already overburdened home budget to a whole month.
More expensive loans
Refinancing a loan is to close existing debts and loans with one new one. It is about replacing old and more expensive loans with a new and cheaper option. This can consolidate and close non-current liabilities, such as smaller cash loans, current account overdrafts, and credit card debt.
When borrowing a new loan, most commonly occur are all the usual costs, such as approval fees for the loan, notary fees, assessment costs, notes, and the like. Refinancing a loan reduces the cost of fees and interest that a customer otherwise pays for a number of different loan commitments.
A special feature of refinancing a loan is that it is a purely dedicated type of loan. Loan money is paid directly into the loan beneficiary’s account. The client is required to provide proof that the money has been spent on closing credit obligations and debts. This means that it is paid out by a bank or other financial institution for a specific purpose and should be used solely for that purpose. This reduces the possibility of the client spending money on other things and potentially generating even more debt. Only about 30 percent of the amount can be paid in cash.
Customers usually opt for this because, by consolidating all existing debts into one loan, it reduces the fees and different interest rates that are inevitable with a number of different loans, loans and loans.
Refinancing a loan – what about a home loan?
Until recently, the housing loan that Croats most often had was unable to refinance. Banks have introduced refinancing of home loans in their operations. Existing home repayment loans can be refinanced with other home loans, such as renovation loans or loans with more favorable interest rates related to the energy performance of the building. Banks even allow refinancing of loans to clients who have taken out a home loan with another bank, but it should be borne in mind that such actions are short-lived and should be consulted with the bank beforehand.
Before a client decides to take this step, it is best to first collect more offers from different banks, both in kuna and foreign currency, to see which terms are best for him and whether refinancing is the best option for him.
What is the difference between refinancing a loan and rescheduling a loan?
Liabilities that are not repaid by debtors are duly rescheduled, while liabilities that are repaid are duly refinanced. It may sound complicated, but in fact reprogramming changes the repayment schedule of your existing loan. The refinancing closes the loans that the client has and opens a new floor, which underlines all previous obligations.
When it comes to rescheduling loans, the following should be distinguished: there is a rescheduling of a loan for the sake of losing a job, so the bank changes the repayment method until it finds a new job, and there are reschedulings that close several different bank loans.