Our advice for lower loan instalments
Taking out a loan can encumber your monthly budget and, thus, reduce your financial safety. However, lower monthly instalments and longer repayment periods may help you avoid that. What follows is our advice on how to reduce instalments in order to have more money per month available.
1. Extended loan repayment period
The simplest way to reduce a monthly instalment is to extend the loan repayment period. In this case, you are given the flexibility to pay off the loan earlier, though not later by any means. The loan amount is divided into several instalments in this way, so that you have a larger amount available on a monthly basis. By improving your financial creditworthiness, you reduce the risk of difficulties in paying the instalments. The possibility of early loan pay-off results from this. If you get a raise or receive any payment in the meantime and pay off the loan earlier, you will reduce the total interest rate expenses.
2. Redeeming a loan or combining several loans into one
This option is particularly cost-effective when interest rates start to drop. When concluding long-term contracts, in case of interest rates dropping, it can be particularly useful to redeem the current loan, or to replace it with a new one. In addition, it may lead to the reduction of interest rates by the legislature. This is how the interest rate in Switzerland dropped from 15% to 10% in 2016. This method makes sense, in particular if there are several loan contracts that can be combined into one. Through a loan consolidation, customers are provided with a better overview, which means that they can plan their monthly budget better and save on the interest rate at the same time.
The interest rate in Switzerland depends on the credit rating – that is, the creditworthiness of the customer. If the credit rating improves during the loan term period, there is a possibility of obtaining a better deal. Submitting a new application may also be cost-effective when interest rates are lower, or if your financial situation improves significantly, or if you get a raise. Paying off credit cards with a private or online loan is especially cost-effective. Interest rates for credit cards range up to almost 12% throughout Switzerland, while the current minimum interest rate for a private loan is 4.5%. Redeeming credit cards is especially cost-effective here.
3. Comparison of loan offers
With numerous loan offers available, it is difficult to cover all of them and put them into perspective. Numerous banks offer different interest rates, repayment periods and loan amounts approved for one online loan. A comparison of all offers would be futile as new offers keep appearing, while old ones are being changed and withdrawn from the market. However, the decisive factor in receiving certain loan conditions is, in fact, the consumer’s credit rating. A person submitting an application at several banks at the same time risks receiving a negative score because submitting an application too often, as well as being rejected, is registered in the credit bureau.
In such a situation, it is best to seek professional assistance and useful advice. Miro Kredit AG has offered its services in brokering and receiving desired loans for a long time. There is also a loan calculator available, which is easy to use and can be used for searching for and obtaining an adequate offer. It is sufficient to state the desired loan amount and to enter the repayment period and monthly instalment, and the total amount will automatically be displayed.
4. Loans for house or apartment owners
Anyone who owns a house or apartment also has a better credit rating – that is, creditworthiness. In these cases, interest rates may be lower than 5% and, accordingly, the loan instalments are also lower because the loan amount for repayment is reduced. If they want to submit an application for a private loan, property owners do not need to initiate being entered into land registries or to pay a mortgage contract fee. This is the reason why a private loan, mostly for smaller and medium investments, is the least expensive loan in Switzerland, which also allows lower monthly instalments.
5. Loan protection insurance
A voluntary loan guarantee offers both the bank and the customers additional protection from an inability to pay loan instalments. Regardless of whether it involves a job loss, an unexpected illness or an inability to work, a loan guarantee in these cases takes over the payment of the monthly instalments. This does not negatively affect the customer’s credit rating and, when applying for a loan, lower and more cost-effective monthly instalments can be negotiated with the bank.