The decision to take a cash loan is often made under the pressure of quick access to additional money. Unfortunately, in such situations, we often choose not the cheapest, but the most easily available cash loans.
Such offers can significantly exceed the borrower’s household budget every month. It is worth considering refinancing your loan. What is it about and what conditions must be met in this case?
Credit refinancing – what is it?
Poles willingly use consumer loans, including cash loans, for the implementation of various plans and investments. The Credit Information Bureau reports that in May 2019, banks and cooperative savings and credit unions granted consumer loans in the amount of USD 7.786 billion.
Compared to May 2018, lending institutions granted significantly higher limits on credit cards – the increase is estimated at 27.6 percent. There were also more consumer loans – their value increased year-on-year by 8.9 percent.
It follows that we are eager to take out cash loans. Often, a cash loan is an alternative to mortgages, for example when the customer wants to renovate the house or flat without completing the mortgage or finish the construction.
However, whenever you take a cash loan, it’s worth spending time analyzing all elements of the loan offer and choosing the best one possible. But even when we do it, it may happen that after a few months of paying off loan installments, there will be much more interesting consumer loan offers on the market. You may then be interested in refinancing your cash loan.
If the customer is not satisfied with the loan he has taken and knows that he is paying over each installment, it is worth looking for an alternative solution, which can be refinancing a cash loan. Most often refinancing concerns mortgage loans, but it is also possible to use it for cash loans. This will reduce the monthly fees for the repayment of financial liability.
Refinancing a loan is nothing but transferring your cash loan to another bank, which has many advantages. First of all, thanks to this you can reduce your monthly loan installment. You can find current offers of the best cash loans in our ranking.
Refinancing will also prove beneficial if the customer has to pay an inadequately high margin for the loan. The reason for changing the lender may also be other factors, such as low quality of service or negotiations on lowering the installment that has been refused.
Can you refinance any cash loan?
Not every cash loan can be converted into a refinancing loan. This is not a popular operation, unlike mortgage refinancing. The final decision whether a bank decides to refinance a cash loan depends on the individual criteria recognized by the bankers.
The best solution will be to choose several attractive refinancing loan offers and send banks inquiries about the possibility of refinancing a cash loan. Our free calculator will definitely help you calculate your monthly installments.
How do you transfer a cash loan to another bank?
In fact, the transfer of a cash loan to another bank involves early repayment of the liability at the current bank and continuing its repayment at another financial institution. From the technical side, the matter is not complicated.
The new lender provides financing to the client who repays the current, unwanted loan. This money is used to pay back the loan in advance. The liability itself is transferred to another bank mainly to pay less under each principal and interest installment and to pay less credit costs in total. However, this is not always the case, which can be a loan refinancing trap.
Actually, cash loans can be transferred to other banks in two ways:
- through a consolidation loan, which will allow you to get extra cash;
- by taking a new, cheaper cash loan at the selected bank for refinancing.
In practice, refinancing a cash loan will require the customer to apply for consolidation or financial loan at the bank that currently has the best loan offer.
The transfer requires the simultaneous repayment of a previous loan at another bank. The repayment operation is carried out by a new creditor for the benefit of the previous one.
In what situations is it worth transferring a cash loan to another bank?
There are many reasons that will justify refinancing your cash loan. The main goal here will be to reduce the cost of lending, among others by lowering the interest rate on cash loans.
Customers wondering when it pays to transfer a cash loan to another bank and use refinancing should know that it is worth doing it when:
- the monthly burden of repaid capital and interest installments is too high for us, and the bank does not want to negotiate with the borrower the existing conditions, including bank margin amount;
- the borrower pays interest on the loan calculated according to the bank’s extremely high margin, which is disproportionate to the margins applicable in other banks;
- the interest rate of the cash loan being repaid at present is much higher than the interest rate on the loan offers that interest the client ;
- the level of customer service at the current bank leaves a lot to be desired.
Whenever loan conditions in many banks change in favor of customers, e.g. as a result of record-low interest rates occurring in the country, you can either negotiate the terms of the previously repaid cash loan or decide on its favorable refinancing.