How can you refinance a loan? How to refinance your loans? List of banks participating in the refinancing program
Refinance a loan- a solution for which the situation in the banking lending market today is quite favorable. Banks themselves offer a variety of options. And what is important for clients is that refinancing conditions can significantly reduce the debt burden by lowering the interest rate, revising the loan term and other parameters.
The favorable situation in the field of loan refinancing is simply explained. In 2015-2016, under the influence of the depreciation of the ruble and an increase in the key rate of the Central Bank, there was a reciprocal increase in interest rates on loans. Today, all borrowers who took out loans at the end of 2015 and before the winter of 2017 have the opportunity to reconsider the terms of the loan. First of all, take advantage of noticeably reduced interest rates, which, according to some proposals and taking into account the borrower’s individual assessments, fell by almost 2 times.
Current trends in the bank lending market indicate that interest rates are highly likely to continue to decline. True, very slowly and, most likely, only by tenths of a percentage point. Waiting for rates to fall further and continuing to pay loans on the same terms for now does not make much sense right now. There are unlikely to be savings, but perhaps, on the contrary, you risk incurring high expenses due to overpayment. Of course, each situation requires separate study and selection of the most profitable solution. But it’s definitely worth taking a closer look at refinancing opportunities.
Refinancing options
There are two main approaches to refinancing:
- Take advantage of a special offer from your bank (where the loan was issued) or another, depending on which option would be preferable in a particular situation.
- Refinance yourself. Simply put, do not use a special banking product, but apply for a new loan with more lenient terms, use the funds received to pay off the balance on the old loan and continue to fulfill your obligations according to new rules.
Key difference between approaches- in particulars of receiving and spending loan funds. In the first case, the loan received will be directed by the bank to repay the current obligation without the consent of the borrower. Yes, perhaps the borrower will receive some additional funds, but he will not have the right to dispose of the bulk of them. In the second case, the borrower himself decides to what extent to use a new loan to pay off the current debt - to close it completely or partially. But a problem may arise with the registration of a new loan itself. If you have a valid loan agreement, the amount is unlikely to be large. On the other hand, the bank may simply not provide refinancing if there are violations (delays) on the current loan, but when applying for a new loan there is a greater chance of not falling under this restriction.
In general, the choice of option depends on the situation. You can consider all offers with suitable conditions and parameters. It is possible that a good solution would be to issue a credit card, the limit of which will allow you to close your existing loan in whole or in part. But here it is worth considering that interest rates on credit cards are still higher than for other forms of consumer lending.
You can use refinancing for almost any loan product - consumer loan, mortgage, car loans, etc. The main thing is to make calculations based on the current lending conditions and those possible after refinancing, determining whether this or that solution will be profitable.
What you need to refinance
First, you should study the available special offers from banks for refinancing, for which:
- You must first contact the bank where the loan was issued and clarify what offers and refinancing conditions it can offer, taking into account the current state of your loan. Most likely, the bank will prepare a personal offer. Whether you agree to it right away or think about it is your decision. But it is better to first simply obtain the necessary information for subsequent analysis in a calm environment.
- After discussing refinancing options with your bank, it is wise to explore other offers. The easiest way to do this is on special Internet portals, where up-to-date information on the banking lending market is concentrated, and using online services, select several offers that suit you according to the terms and conditions.
Based on the information received, you can already make an analysis and evaluate which bank and which offer to apply for.
Banks have different approaches to the design of products intended for refinancing. Much depends on:
- the number of existing loans (they can be combined into one using refinancing);
- the state of settlements on current obligations (the presence of arrears and other violations significantly reduce the chances of refinancing, especially if there are overdue debts on other loans);
- the current financial situation of the borrower, taking into account that it may have changed compared to the situation when the loan requiring refinancing was issued;
- type of loan (loans) and debt balance (amount);
- a new check by the bank of the potential borrower regarding his solvency, the presence of risks and other circumstances underlying the formation of the loan proposal and its conditions.
To obtain refinancing, almost identical documents are drawn up as for regular lending, depending on its type. The borrower is required to submit an application, submit the package of documents required by the bank and agree on the terms of the contract and sign it. The funds allocated under the refinancing program will be used to repay the existing loan(s). But if the bank approves a large amount, then part, of course, is transferred to the borrower’s account or received by him in cash. Many products allow you to increase the volume of lending beyond the amount to be used to pay off old debts. By its legal nature, refinancing will mean concluding a new loan agreement on completely new conditions compared to the previously existing ones.
With the development of the banking sector in the country, the number of people who apply for a loan is growing every day. This helps solve financial problems, get an education or buy your own home. But due to the worsening economic situation, many borrowers are beginning to experience financial difficulties, which gradually lead to late payments. Refinancing loans from other banks helps not only to avoid financial problems and a critical debt situation, but also to reduce interest on the loan.
In this article we will look at the peculiarities of the refinancing procedure and find out which banks offer a similar service today.
According to statistics, today almost every tenth client who has taken out a loan applies for a refinancing service. This large figure indicates the relevance of this banking instrument and forces us to pay attention to it.
Refinancing is a banking instrument that allows you to get a new loan to pay off the old one. In what cases do people turn to such a program and how beneficial is it?
In essence, refinancing (or refinancing) is a new loan that is taken out to pay off the current debt. Banks today are increasingly beginning to develop programs that, on the one hand, help clients solve their financial difficulties, and on the other, attract new borrowers.
For whom is this most beneficial and does the refinancing procedure allow you to reduce loan repayment costs?
There are 2 types of refinancing:
- external (the current debt is covered by another bank);
- internal (occurs within one bank).
How does refinancing work?
Of course, the procedure for refinancing a loan is not carried out by the bank out of good intentions.
Thanks to conscientious clients who are looking for ways out of a difficult situation, banks increase their base and replenish their loan portfolio. Before approving an application for refinancing, any bank will This is a very important criterion for selecting clients. No organization will pay a loan for which the client has already overdue payments or has been in arrears in the past.
This is checked fairly quickly. Even if at the time of applying to another bank, the borrower has no current debt, this does not guarantee approval of the application.
The late payment could have been months ago, lowering the customer's credit score and reducing their chances of getting their application approved.
It should be understood that all information about issued loans, loan amounts, repayment schedules and terms is stored in the Unified Credit History Bureau.
The Russian Bureau of Credit Histories (abbreviated as RBKI) is an organization created to systematize the credit histories of all borrowers for banks, leasing and insurance companies, credit cooperatives and organizations. RBKI has the most complete and up-to-date information on all clients, which is constantly added and updated.
Before turning to another bank for a refinancing service, it would be a good idea to find out your credit rating from this Bureau and assess your chances in advance. The fact is that every refusal of another bank is also recorded in your history. In the future, the chances of receiving a new loan will decrease even more, because the bank will see that you have previously received repeated refusals from other financial institutions.
What is the point for a bank to take such a financial risk and enter into an agreement with a client who may become a potential defaulter?
Does this mean that once a client has compromised his impeccable credit reputation, he can no longer count on further loans?
Of course, each bank independently determines its filtering algorithm for clients with a “bad” credit history. A client who took 100 thousand rubles from the bank and stopped paying already in the fourth month will not be on the same level as a borrower who has been disciplined in paying off the loan for several years and has only made late payments a few times.
What is the refinancing procedure like?
The scheme is quite simple and understandable.
- The client collects a package of documents for a new loan, fills out an application for refinancing and applies to Bank No. 2.
- Bank No. 2 (to which the client applies) reviews the application and makes a decision.
- If the decision is positive, Bank No. 2 pays the entire debt to Bank No. 1 (with which the client has a current loan). In this case, the client is obliged to notify Bank No. 1 of his decision to repay the loan early. The Lender's consent is not required in this case, but, according to the terms of the agreement, the client is obliged to notify about his decision in advance (the specific period is indicated in the agreement). A specialist from Bank No. 1 must issue a certificate reflecting the amount until the loan is fully repaid as of the current date.
- On the day of the transaction, the client signs a new agreement with Bank No. 2. Bank No. 1 issues the borrower a certificate of full repayment of the loan. The borrower shows this certificate to Bank No. 2 in order to confirm the intended use of money under the refinancing program.
Thus, the borrower has the opportunity to begin a repayment program for Bank No. 2 (which completed the refinancing procedure) on more lenient terms.
When considering your application at a new bank, analysts will carefully check overdue loans and documents confirming income. Taking out a new loan to cover an existing debt will only be possible if there are no arrears.
What loans can be refinanced?
Several types of loans are subject to refinancing:
- mortgage;
- auto lending;
- targeted loans (goods);
- cash loan.
Refinancing is especially advisable for loan programs with a repayment period of more than three years. This makes it possible to significantly simplify the debt repayment scheme. In the case of a mortgage, when the loan term is several decades, a reduction in the interest rate by even 0.5%-1% will significantly affect the final amount.
It also makes sense to use this service if the borrower has several loan products with different repayment schedules. With one large loan issued from another bank, you can immediately repay several products (card, mortgage, consumer loan). In this case, you can even win on the interest rate.
Why does a borrower need refinancing?
In order to understand the purpose and features of refinancing, let's figure out why the borrower needs it? Financial experts note several factors that lead clients to the decision to refinance.
A client can apply to a bank for refinancing services in three cases:
Sometimes the impulsiveness of signing an agreement, without the desire to delve into the intricacies, numbers and hidden commissions, leads to the client taking on financial obligations that he either cannot fulfill after a while, or realizes that he received a loan on unfavorable terms. As a result, after a short time the borrower realizes the severity of the credit burden and his inability to repay.
Not everyone manages to get a loan on favorable terms, and sometimes awareness of this fact comes after just a few months. You cannot terminate a loan agreement, but you can change its terms.
Of course, not a single bank will agree to change the current terms of the agreement by offering a lower interest rate. In this case, the refinancing procedure will help.
For some clients, this is the only possible chance to improve their financial situation without ruining their credit history and without ending up in the penalty box.
When is it profitable to refinance?
In what situations is it advisable for a client to apply for on-lending services to another bank?
- it is necessary to reduce the financial burden and increase the loan term;
- desire to change the currency under the contract;
- more favorable interest rates in another bank;
- it is necessary to remove the seizure from the collateral property;
- changing the payment schedule scheme (from an annuity to a differentiated scheme);
- consolidation of credit products.
Let's now look at the appropriateness of each case for refinancing.
- Decrease in interest rate.
As for more favorable conditions and a reduced interest rate from another bank, you need to be very careful here. According to financial experts, it makes sense to refinance with other banks under more favorable conditions only when the interest rate is at least 2% lower.
In other cases, a new loan agreement may seem like a lifeline only at first glance. In fact, it will drag you even deeper into financial problems or take up a lot of time and nerves, and in fact, will not reduce the financial burden.
You should not resort to the refinancing procedure if there are several months left before the full debt is paid, since the amount of time that will have to be spent on completing a new transaction will not be repaid in the difference in interest rate.
If we are talking about a long contract period (for example, a mortgage loan), then reducing the rate by even 1% will allow you to save significantly.
Therefore, if you have such a loan from a bank, it would be a good idea to periodically find out the terms of lending from other financial institutions.
- Increasing the loan term.
As for significantly increasing the loan term in order to reduce the financial burden, you should be very careful here.
Refinancing of this type was in great demand at the end of the 2000s, when the dollar exchange rate sharply increased and many borrowers found themselves on the verge of “financial collapse.”
It is advisable to resort to this option if there is an unstable financial situation on the market, the exchange rate increases, and the borrower receives the main income in rubles. Financial experts generally recommend taking out a loan in the currency in which the client receives his main income.
When applying for a refinancing service, you should understand that another bank will refinance at the current rate, which will automatically increase the loan amount. But on the other hand, this will help stabilize the situation and avoid troubles with late payments in the future.
The difference between refinancing and loan restructuring
The main purpose of loan restructuring is to change the terms of the agreement, the purpose of which is to reduce the financial burden. In fact, the contract is not closed, but its terms are changed. Increasing the term of the loan agreement reduces the amount of the monthly payment, allowing the borrower to gradually repay the debt.
Unlike refinancing, restructuring is carried out by the same bank where the borrower has a loan and, as a rule, the change in conditions is not associated with a change in the interest rate.
Some people confuse refinancing with restructuring, which actually means re-issuing a current loan to a “softer” one for the client.
By agreeing to this procedure, the bank makes certain concessions to the client, who is currently in a difficult financial situation and cannot fulfill its financial obligations under the agreement. But at the same time, the benefit of the bank is quite obvious.
Firstly, the term of the contract increases, which means that the bank will receive greater profits from paying commissions and interest.
And secondly, the client will gradually pay off the entire debt instead of the case going to court.
What do you need to refinance?
Registration of the service involves the provision of a full package of documents, as when applying for standard loans.
To take out a new loan you will need the following package of documents:
- passport;
- identification code;
- documents of the guarantors (if any are specified in the contract);
- a copy of the work book;
- income certificate ((2NDFL);
- loan agreement (current);
- completed application for refinancing;
- receipts for payment of the current loan;
- certificate from the bank about current debt.
In addition to this standard package, some banks may require additional documents.
The situation with refinancing loans in Russian banks is very different. Some banks provide loan refinancing for their own clients. Other financial institutions offer to refinance loans issued by other companies.
In what cases can a credit institution refuse? If, after reviewing all documents and checking your credit history, the bank doubts your solvency.
What should you pay attention to before signing a contract?
Before contacting another bank for refinancing services, you need to study the following points:
Step-by-step instructions for obtaining refinancing
Advantages and disadvantages of refinancing loans from other banks
Today, many clients have already used the refinancing service of other banks, appreciating the advantages of this product.
Pros:
- the possibility of changing the interest rate to a more favorable one;
- the possibility of removing an unbearable financial burden by increasing the term of the loan agreement;
- you can receive an amount sufficient to repay the mortgage in order to remove the collateral from seizure;
- consolidation of several loans;
- changing the structure of the repayment schedule (transition from an annuity to a differentiated scheme).
- possibility of changing the base currency under the agreement.
But, despite the visible advantages of the refinancing procedure, some disadvantages cannot be ignored.
Minuses:
- the procedure will require repeated collection of documents, which entails a loss of time;
- many banks charge additional fees;
- additional expenses (notary, legal consultation, etc.)
- the terms of the new loan agreement may impose more stringent requirements on the borrower.
Which banks provide refinancing?
Conducts refinancing procedures for legal entities and individuals, offering refinancing programs for car loans, cash, cards, and consumer loans.
The amount of consumer loan refinancing is up to 1,000,000 rubles.
Interest rate – 13.9%
Duration – up to 5 years.
Special conditions: the current contract is valid for at least 6 months. At least 3 months before closing the contract.
The loan amount is at least 200 thousand rubles.
Interest rate – up to 15%
Duration – up to 7 years.
Special conditions: the possibility of closing up to three current loans with one loan. The validity period of the current contract is at least 6 months. At least 3 months before closing the contract.
The application is reviewed within 5 working days.
- Bank VTB 24
The maximum loan amount is 3 million rubles.
Interest rate – 15%.
Duration – up to 5 years.
Requirement for the client - official employment, 18 -65 years old.
Special conditions: possibility of closing up to 6 loans with one loan.
VTB Bank has a 100% approval rate for refinancing applications if the borrower has not missed loan repayment dates in the last 12 months.
The application is reviewed within 4 working days.
Refinancing amount – up to. The Bank does not provide on-lending for foreign currency loans.
Interest rate – from 16.5 to 25%. The interest rate depends on the amount.
Duration – from 1 to 7 years.
Requirement for the client – official employment, 21-65 years old.
Special conditions: work experience at the last place of work is at least 6 months. A prerequisite is an ideal credit history and no late payments for the last 12 months.
The application is reviewed within 4 working days.
Rosselkhozbank
Conducts the procedure for refinancing legal entities and individuals in rubles and foreign currency, offering refinancing programs for car loans, cash, cards, and consumer loans.
The amount of refinancing a consumer loan is from 100 thousand rubles to 1,000,000 rubles.
Interest rate – from 13.5 to 15%
Duration – from 1 to 5 years.
For on-lending over 500 thousand rubles, a Guarantor (individual) is required.
Client requirement: 23-65 years old, 2-personal income tax or 3-personal income tax.
Special conditions: the minimum debt balance is at least 10 thousand rubles, a pledge of liquid property is required. The loan approval rate is above average, but this organization should not have a damaged credit history.
Please note that all banks set minimum and maximum loan interest rates. This depends on many factors: loan amount, term, category of borrower. Therefore, when choosing the most profitable refinancing program for yourself, ask the manager to calculate your personal rate during the consultation, based on the real state of affairs.
Alfa Bank works primarily with large loans (cars, mortgages). Due to the long loan term, they are the most attractive for the bank. Approval of the application will depend on the remaining loan term and the amount of debt.
The loan refinancing amount is from 600 thousand rubles.
Interest rate – from 13.5.
Duration – up to 5 years.
Home Credit Bank.
This bank is particularly loyal to its customers, even those who have overdue payments.
The maximum loan amount is up to 500,000 rubles.
Interest rate – 19.9% (same for all borrowers).
Duration – up to 60 months.
Requirement for the client - official employment, 21-65 years old.
Application review time is up to 5 working days.
You can close almost any loan with a new loan (car loans, mortgages, credit cards).
It is impossible to unequivocally answer the question of which bank is more profitable to refinance a loan. It all depends on the amount of remaining debt and the type of lending.
For example, with a mortgage it is better to go to Alfa Bank or Sberbank of Russia. A cash or consumer loan can be closed with the help of banks such as VTB24, Rosselkhoz Bank, Home Credit.
Video. Mortgage refinancing
Conclusion
Refinancing is a fairly profitable and relevant service that allows you to get a new loan to pay off the old one. At the same time, the terms of the new loan agreement may be more lenient. If the borrower has financial difficulties that do not allow them to repay the current debt as usual, then this service can help avoid late payments. This will also help keep your credit history positive.
According to financial experts, only a new loan will help to get out of the financial crisis, the annual rate of which will be at least 2% lower than the existing one. In other cases, the refinancing service may seem like a lifeline only at first glance. In fact, it will drag you even deeper into the debt hole or simply waste time.
Modern resources allow you to independently monitor banking offers, comparing refinancing programs and choosing the most optimal one for yourself.
Video. Who will benefit from refinancing?
Refinancing a consumer loan involves obtaining funds at lower interest rates to pay off existing debts in this or another bank. To choose the best conditions, it is wise to make a list of available offers, compare them and only then apply for money.
Before signing an agreement, you need to carefully read what the bank offers. You need to take a closer look at the commissions, because... they can significantly increase the cost of the loan, and refinancing will lose its meaning.
How to make a decision
In order not to make a mistake with your choice, you need to find out all the pros and cons of the provided and current loans. The sequence of actions could be as follows:
- Carefully re-read the current agreement and pay attention to the conditions for early repayment - terms, the presence of additional commissions.
- Find out the possibility of reducing rates on your current debt. Banks, in order to retain borrowers, are reducing interest rates and eliminating some fees, following market trends.
- Compare interest rates with other banks that offer refinance loans.
- Analyze the conditions: period of use of the funds, method of provision, requirements for the package of documents, availability of additional commissions.
- Find out whether the fact of debt repayment is checked, what conditions are put forward in this regard and what are the requirements for the existing loan.
Banks practice a system of personal interest rates, which are assigned based on information about the client, such as gender, place of work, position, social status, and timeliness of making monthly payments on other loans. Therefore, the percentage offered to you may differ significantly from that stated in the advertisement.
Conscientious payment of current debt and a positive credit history provide grounds for receiving funds on more favorable terms.
Pros and cons of refinancing
Refinancing consumer loans has undeniable advantages:
- the ability to significantly reduce the interest rate;
- combine several loans into one, while getting rid of additional payments and commissions for each;
- reducing the financial burden due to a smaller monthly payment;
- the ability to reduce or shorten the loan term.
At the same time, there are similar programs that can be fraught with dangers:
- additional conditions, overpayments (insurance, commissions for registration or transfer of funds, etc.);
- a longer period leads to a total increase in the cost of the loan;
- paperwork and loss of time with insignificant savings are not always justified.
Based on the above, we can conclude that refinancing can only be started after a detailed study of all the conditions offered by the bank.
Comparative review of the best bank offers
A comparative table will help you get acquainted with the conditions offered by ten Russian banks in 2019 and choose the most profitable ones:
Bank | Amount of credits | Duration, months | Interest bid, % | Amount, rub. |
---|---|---|---|---|
until 3 | 1-84 | from 11.5 | up to 3 million | |
until 6 | 6-60 | 13,5-17 | up to 3 million | |
"Interprombank" | any | 6-84 | from 12 | 45 thousand – 1 million |
until 3 | 12-84 | 11,99-23,99 | 50 thousand – 2 million | |
up to 5 | 1-84 | from 11.99 | up to 3 million | |
1 | up to 84 | from 12.4 | up to 3.5 million | |
up to 4 | 12-60 | from 12.9 | up to 1 million | |
up to 5 | 3-60 | 13,5 | up to 3 million | |
some | up to 15 years | from 11.9 | up to 3 million | |
some | 6-60 | 11,9-22,5 | 50 thousand – 2.5 million |
At Rosselkhozbank, the loan amount and time of use depend on the client’s place of work, whether he has a salary card and the conscientiousness of repaying the debt on the loan from this and other banks. The longer the repayment period, the higher the cost of debt. The lowest percentage is set for employees of budgetary organizations who took out a loan for 12 months.
VTB offers cash loans. The program provides additional funds for any needs. Interprombank, in addition, does not oblige you to pay commission or insurance. Gazprombank rates are set individually when concluding a loan agreement with an individual. Sberbank attracts clients by providing funds without guarantors, collateral, commissions and confirmation of the return of previously borrowed money.
Alfa-Bank and Otkritie differentiate the cost of the loan depending on the period of use and the category of borrowers. The amount and repayment time at Alfa-Bank have been increased for salary card holders and employees of partner companies.
An application for refinancing can be submitted online, through forms on official websites. There is also a calculator that allows you to pre-calculate the cost of a new loan.
You can make a loan less burdensome by lowering the interest rate and monthly payment amount. This opportunity has arisen because the Central Bank is reducing 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. That's why mortgages and consumer loans are becoming cheaper. In December 2014, the key rate reached 17% About 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 reduce the key rate by 25 bp, to 7.50% per annum.
If you took out a loan just at the moment when rates were at their maximum, you can now refinance it.
What is loan refinancing
Refinancing is taking out 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 load).
- Obtain additional funds to your existing loan (monthly payment will not increase).
Do not confuse refinancing and restructuring - renegotiation of the terms of an existing loan. Refinancing is needed in order to save money, restructuring is needed to reduce the credit burden if you cannot repay the debt. In the first case, you can contact any bank, in the second - only the one where you took out the loan.
You can refinance several loans at once. For example, you have a car loan and credit card debt. They are combined into one, a total payment and one bet are made. 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. It all depends on the conditions.
You can refinance the loan at the same bank where you took it out, but there is a chance that you will be refused. There is no need for the bank to reduce interest on the loan and lose profits. In this case, refinance the loan with another bank. Choose the one that offers you the best conditions.
It works like this. You submit a request for refinancing. It is approved, and the new bank transfers the amount of your debt to the previous bank from which you originally took out the loan. You write an application for early repayment in the previous bank, receive a certificate of closure of 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 loan, car loan, mortgage, credit card, debit card with overdraft. But not all banks offer such a choice; some work only with consumer and car loans.
There are restrictions on the amount, but each bank has its own conditions. Not all banks refinance foreign currency loans.
Banks refinance only those 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 clients 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 out at least six months ago) and must not expire in the next 3-6 months.
When do you need to refinance your loan?
1. If you have several loans
The refinancing procedure will turn several loans into one 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 will take a long time to pay and a rate reduction of even 1.5% will allow you.
3. If you have a foreign currency mortgage or foreign currency loan
Due to the growth of the dollar and euro, foreign currency loans, instead of being profitable, have become burdensome. With refinancing, you can lower the interest rate, reduce the amount of the monthly payment, or make the loan in rubles.
4. If you need available funds in addition to your existing loan
When refinancing a loan, you can additionally ask the bank for a certain amount. As a rule, this is 50–100 thousand rubles. It is assumed that due to the reduction in the rate, the monthly payment will not increase, although the loan term may increase.
5. If you want to reduce your monthly payment, but are ready to repay the loan longer
This is not the best measure: if you increase 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 payment term will increase.
What to pay attention to
If you have paid off most of the loan, then it is not worth refinancing. Even if your loan rate decreases, most likely you will not benefit.
This is because interest on the loan is paid first, and only then the principal amount. If you refinance the loan, you will again pay interest instead of paying off the principal.
If you took out a loan for five years and have 1.5–2 years left to pay, you shouldn’t refinance it.
When refinancing a mortgage with a new bank, additional costs arise: for real estate valuation, for certificates from the BTI and house register, for notary fees.
Additional expenses will also arise with reinsurance. If you refinance your mortgage or with another bank, you will need to take out new insurance or renew the old one (if your insurance company is accredited with the new bank). The insurance amount may increase by several thousand per month, which means that the benefits of refinancing will decrease or disappear altogether.
Before refinancing, calculate your loan payments at the new interest rate, taking into account additional costs.
If you refinance the loan with the same bank that issued it, they 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 again ask to refinance the loan. This will show the seriousness of your intentions, and the service may be approved. Otherwise, the bank will lose the client, and this is unprofitable for it.
Also keep in mind that refinancing may increase the loan term. The larger 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 you apply for refinancing, check the details: is there a fee for refinancing, for transferring funds from the new bank to the old bank, or a penalty for early repayment of the loan from the old bank.
For example, if you refinance to close five loans from different banks, you may be charged a transfer fee five times or fined five times for early repayment.
You will receive exact numbers only at a bank branch when you submit 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, during the year you paid the bank 235,392 rubles, the remaining debt is 371,024 rubles). For this amount you need to calculate refinancing.
Bank X offers you refinancing at 19% per annum for two years. We enter this data 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 the new loan.
Before this, you had already paid 235,392 rubles to your previous bank. It turns out that in total you will pay 683,021 rubles. If we had paid off the old loan, we would have paid 706,191 rubles. The total benefit will be 21,170 rubles.
This benefit does not take into account possible commissions and additional expenses. You need to find out about them from the bank.
What documents will be needed
To refinance a loan at a new bank, you need to collect a standard package of documents:
- Passport.
- A second identification document (TIN, SNILS, international passport, driver’s license, debit or credit card of any bank, compulsory medical insurance policy).
- Certificate of income 2-NDFL.
- Loan 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 the bank less, but it is important to use it wisely.
- It is profitable to refinance a mortgage if the rate is lower by at least 1.5%.
- 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 loan refinancing taking into account additional costs and commissions.
On the website you can find profitable offers from financial institutions that refinance loans from other banks at a favorable interest rate. This offer will be of interest to individuals who have an unsecured loan with a higher interest rate. The new bank offers the client more favorable lending conditions and repays the old debt immediately after concluding the loan agreement.
What is refinancing?
Banking institutions regularly change rates on consumer loans up or down. This is due to the unstable situation in the economic market.
The refinancing program is an advantageous offer from banks that allows you to change the conditions for repaying debt with a lower interest rate, which significantly facilitates debt repayment and reduces the amount of expenses.
Refinancing at a lower interest rate is beneficial for citizens who have debts on a loan with a higher interest rate. Current bank offers for 2019 can be viewed on our website.
How to reduce debt with refinancing?
Citizens who already have a loan from another bank and want to reduce their debts to a financial institution can use the credit refinancing service. A new loan on more acceptable terms provides for a reduced monthly payment percentage, but at the same time the loan term increases.
In what situations is it beneficial to refinance consumer loans:
- the client found lower lending rates in another bank;
- a change in the payment schedule is required;
- there is a desire to change the currency to pay off the debt;
- there was a need to reduce the financial burden of monthly payments;
- the desire to combine several issued loans into one to simplify the payment of debts;
- the need to close a loan secured by real estate or a car with the removal of the seizure of the property.
Which Moscow banks refinance loans?
On the website you can find MSK banks that are ready to refinance a loan without a certificate of income, on very favorable terms for the client. Some financial institutions also allow you to take out a new loan without paying off other loans.
MSC banks offering credit refinancing services:
- Rosbank – refinancing loans for up to 60 months at 13.5% per annum.
- MTS Bank – without proof of income, from 9.9% per annum.
- RosselkhozBank - without guarantee, from 10% per annum.
- Akibank – refinancing of consumer loans at 11.5%.
- Russian Capital Bank - on-lending for 48 months at 10% per annum.
Using our website, each borrower will find which bank is best to draw up an agreement to refinance a loan in other banks, at the most favorable interest rate.
How to refinance a loan in Moscow?
Before choosing a bank for refinancing a consumer loan, you must carefully study the terms and requirements of the new lender. On the website service this information is available for each banking offer. Having chosen the best option for concluding an agreement, we proceed to filling out an online loan application.
The online application for refinancing is completed in stages:
- On the website, in the column of the selected bank, click the red “Submit Application” button.
- The program automatically transfers to the lender's official website. There you need to fill out the form, focusing on simple tips and submit the completed application in one click.
A decision from the lender will be sent to the specified e-mail on the same day. If the bank approves the application, the client needs to contact the permanent office of the financial institution with personal documents according to the list specified in the conditions.
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