Do you have a problem paying off your liability? See if the non-bank company where you took out the loan is able to refinance it.
Along with the development of website functionalities, the offer of additional services is also changing, both in non-bank institutions that grant loans online, as well as in traditional banks offering loans. Companies lending money try to meet the client, giving him new opportunities and facilities. Thanks to this, we can meet the loan refinancing date. Who is the service for and can anyone use it?
Refinancing the loan and extending the repayment date
To begin with, two concepts should be clearly distinguished. Many people understand refinancing a loan as an extension of the time to pay off a financial liability. Under the new anti-usury act, prolonging the loan repayment would simply be unprofitable for the lender. Why? The Anti-usury Act harmonized the maximum costs that the lender incurs when providing financial assistance, imposing a limit on it that includes all costs incurred by the person taking out the loan. Thus, according to this principle, companies include any costs of extending the loan, usually in administration fees. If they wanted to grant the client a prolongation of the time in which the loan is to be repaid, he would have to do it for free or for a small fee. It is not difficult to imagine how many customers would be willing to use such a service. Loan companies care about financial liquidity, which is why they care most for customers to pay their liabilities on time. The common practice of extending repayment terms is therefore out of the question.
What is loan refinancing?
Refinancing a loan involves taking out a new loan from another company to cover the debt that we are unable to pay back. Let’s see what a refinanced loan is, for example.
Imagine that at X we take a payday loan of $ 2,000 for 30 days. The repayment deadline is approaching and we have no money. We do not have to worry immediately about the consequences of not paying back payday loans and think about the large interest payable. We can refinance the loan by reporting the matter to the company where we have made a financial commitment. Then company X on our behalf submits an application to company Y for the amount that we have to pay back. After a positive decision, Company Y transfers the appropriate amount directly to the company where we got into debt. We must know that we cannot freely dispose of money from a new loan. These funds are exclusively intended to pay the lender. With this solution, we quickly repay the required amount and avoid criminal interest. However, there is a new case to be dealt with, namely an agreement with Y, which will specify both the time for repayment of the new loan and will allocate the appropriate fees for refinancing the loan.
If someone asks what a refinanced loan is, in addition to defining this service as taking a new loan to settle a previous financial liability to a given company, it should also be said that it unfortunately involves additional costs. The fees are not small. For example, for payday pay for 1000 dollars, refinancing in another company for the next 30 days can be up to 300 dollars. Companies that offer customers this type of service, on the websites of their services usually show how the price list for a refinanced loan is shaped. It’s easy to see that refinancing a loan is a very similar service to extending your repayment time. Companies providing payday loans and loans via the Internet have found a way that does not violate the anti-usury act, which was intended to significantly limit the possibility of continuing to extend the loan. As the example shows, a way can be found for everything.
What is loan refinancing
In the case of loans or mortgages, refinancing is based on a very similar principle as refinancing a loan. There is one difference. In the case of refinancing a loan, a customer who has problems with timely repayment takes a loan from another company. We decide to refinance a loan when we find an attractive offer in another bank, thanks to which we will repay our financial liability on better terms. It is the client’s responsibility to agree on the repayment schedule with the new lender, as well as to review the table of fees and commissions of the first loan in advance. This is important because of the additional costs that banks may charge for choosing a refinancing service. It is also worth knowing that in the case of the purposefulness of taking a loan does not change, and in the case of a loan for an apartment you have to reckon with additional costs for formalities such as changing the entry in the land and mortgage register, creating a new mortgage.