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Debt restructuring for students

The rescheduling of a student loan can be necessary if there are difficulties with repayment. Interest savings are rarely associated with this, because student loans that supplement or even replace the Credit Aid are granted on fairly favorable terms. In most cases, debt rescheduling of a student loan can hardly be made much more cheaply. Banks grant student loans, and KfW also offers a particularly favorable offer here. Many students would not be able to complete their studies without this additional financial injection. Most banks (but not always) pay out in monthly installments, and repayment can often start a few months after graduation. However, there is no significant waiting period such as the Credit Aid or the KfW student loan for half a year or even two years, most banks require repayment approximately three months after the payment. This means that anyone who has not yet found a job could run into financial difficulties. In contrast, rescheduling a student loan can help.

The debt trap study time

The debt trap study time

The most common cause of student debt restructuring is overdrawing your own account. In addition to the general cost of living, students must also pay fees and the cost of training materials with their own funds.

Although it is possible to apply for an interest-free loan through the Credit Aid office, the amount of this loan is limited and often not sufficient if the trainee also has to pay rent for his own living space. There is no time for secondary employment, especially in the main study, because the university events demand all capacities from the participants. It is also important to achieve a degree that is as positive as possible in order to maximize individual career opportunities. Therefore, many students overdraw their accounts to finance personally necessary costs.

At first glance, a credit facility may be tempting, since the contract or the general terms and conditions usually stipulate that comparatively long repayment phases apply. However, the overdraft facility often leads to an economic spiral building up because it is associated with high interest charges, which must also be repaid when repaying. The account holder has to calculate with higher and higher costs the longer the overdraft facility is used.

As a result, the economic situation is rapidly deteriorating and the students concerned are often at risk of falling into debt. Debt restructuring is common here
a sensible solution to meet the creditors’ liabilities.

Debt restructuring options for university students

Debt restructuring options for university students

If the student is interested in rescheduling in order to replace the legacy issues with a new loan, the search for a lender often turns out to be difficult. The problem is that credit institutions only want to provide collateral to minimize their own financial risks. However, the student usually only has minor sources of income that do not have a convincing effect on the lender.

However, there are some lenders that offer college students the opportunity to reschedule. This makes sense, because otherwise the student can get into economic distress due to the overdraft costs caused by the overdraft facility.

It is advisable to talk to the house bank where the current account has been opened. The bank will also examine the new loan application for its own interests. If the mountain of debt has already grown so high that there will be existential hardship in the future and the student will become insolvent, the bank may have to forego its claims.

To prevent this economic loss, they approve a new loan agreement that is intended to provide financial relief to the students. The possibility of refinancing enables the university student to pay off his personal debts in agreed installments. This not only relieves him financially, but also keeps his head clear for upcoming exams.

Debt restructuring of a student loan: how to do it!

Debt restructuring of a student loan: how to do it!

When rescheduling a student loan, a cost reduction is explicitly not to be expected. The old loan has to be repaid, a new one with a longer term and if possible not too high interest rates. What are the advantages of rescheduling a student loan?

  • lower monthly rate
  • Relief from reminders from the previous creditor bank
  • Avoiding a negative Credit Bureau entry
  • new creditworthiness, important for investments (e.g. in a doctor’s own practice)

There are a few prerequisites for this. Interested parties should pay attention to the following:

  • Interest on the new loan must be as low as possible, otherwise rescheduling a student loan can be very expensive!
  • The old loan must be redeemable without prepayment penalty.
  • When determining the future term, proceed with a sense of proportion. Nobody should pay off for too long, even if a lower monthly rate beckons. Otherwise the costs escalate.

It should also be noted that the lender generally charges additional fees when entering into such a contract. These should also be taken into account when deciding.

It is always advisable to compare different offers with one another, since the loan offers sometimes differ considerably. Due to the generally insufficient creditworthiness, the market for university students is naturally limited. There are only a few credit institutions that offer such a possibility at all.

Nevertheless, the few donors should also be compared in terms of their conditions in order to avoid any disadvantages from the outset. In addition to the house bank, students can also find providers on internet credit portals who may agree to rescheduling.

It may happen that the lenders ask for a guarantor for security reasons. If the student is able to name a guarantor, the bank generally has no problems in issuing a new loan. The chances are all the better if the guarantor has to offer collateral, for example a good monthly income or valuable objects.

Finally, the higher education institution should make sure that the contract agrees realistic repayment rates that they can actually service.

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5 tips for a quick loan approval

Personal contact – quick advice without delay

The first tip may sound relatively superficial, but it can result in a quick loan approval. The applicant should ensure personal contact with the credit institution at all stages of the advice. This can be done, for example, by phone or through the on-site appointments – some banks also allow home visits. This ensures that the usual delivery times for information brochures or documents are avoided.

In general, it is advisable to discuss any concerns regarding the loan with the responsible bank employee. In many cases, the interested party is referred to different places or familiarized with the company’s online pages. Certainly everything worth knowing can be found here. Nevertheless, as many steps as possible should be carried out from a single source, from obtaining information to signing applications and documents.

The time advantage over correspondence by post is at least two to three days for every request. It may take several weeks for the entire consultation to be completed and each document to be filled out. Valuable time that passes through unused waiting – and yet could be used better.

Questions about credit

Incidentally, many questions about credit can now also be answered online: Almost all banks, savings banks and other credit institutions have summarized everything relevant for this on the corresponding websites and made it available to the citizens concerned. Here it is possible to answer the first – mostly general – questions and thus to ensure a quick start in lending. Personal contact with the consultant would then only be necessary for specific matters. Significant time savings are also waiting here.

The contact points at the bank:

  • Personal contact on site: It is particularly important when individual credit information that differs from the general questions is desired.
  • Contact by phone: This form of contact is always useful if questions or problems need to be discussed quickly and without delay.
  • Contact via the online form: This is helpful for general concerns, but for other cases the form is usually not detailed enough.
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Is it safe to buy online by credit card?

E-commerce offers consumers the convenience of shopping around the clock, the ability to compare prices and the ability to get more discounts. However, be careful not to fall into blows! Check out some tips for making a secure online credit card purchase.

How to know if the site is safe?

How to know if the site is safe?

Is the brand known? Do you have friends who have already bought products from her, even in physical stores? Large brands already established in the market are very safe. However, a common scam is for a site to impersonate a well-known brand, adopting a similar name and logo , to inspire confidence in the buyer.

To avoid this type of fraud, make sure there is a closed lock icon next to the URL in the browser, as in the image below.

How to enter credit card details correctly?

How to enter credit card details correctly?

The required data are: your name (as written on the card), credit card number, security code (those three digits on the back) and expiration date.

Never pass personal contact credit card details to third parties via chat. Only fill in when there are dedicated boxes on the site itself. Warning: No website will ask you for passwords to make a purchase!

If someone has my data, can they shop on the internet?

If someone has my data, can they shop on the internet?

Yes. If your card is lost or stolen, or even if you give it to someone else, they can impersonate you and make purchases over the Internet, as the password is not required. In such cases, cancel your card immediately.

When a transaction is suspicious (a very high value, different from what you usually do), the bank blocks it and / or notifies the holder. But it’s worth checking if your bank has any other security options for credit card transactions. Some notify via mobile when a purchase is made, use a token or even make a virtual card available.

Some websites use these systems to protect your bank details, which is beneficial for both the buyer and the store.

Tips for buying over the internet

Tips for buying over the internet

  • Trusted sites have a clear presentation and set out (even in small print) the terms and conditions of payment.
  • Promotions do exist and should be taken advantage of, but be wary of ads that promise what they can’t deliver, such as miracle weight loss products and offers that seem too good to be true.
  • Read the payment terms. Even trusted sites charge fees that are not explicit. Stores may include a convenience fee or charge shipping, and airline ticket sales websites may hide in small print the total ticket price plus taxes and fees. Following the same logic, when making an online hotel reservation, read the conditions to know if you will be charged in advance, if there is a cancellation fee, among others.
  • Document everything: Every serious site will issue a voucher, purchase protocol, or even email confirming the transaction. Keep them as a guarantee in case something goes wrong.

And you, have you ever gotten caught in some credit card shopping online? Tell us and see more tips on the blog!