Loan repayment – how to pay back your loan

The loan amount is in your account and you are justifiably happy that you have received the loan amount and are able to make your planned investment – but at the same time the financial obligation begins to pay off the loan amount in installments. It is common for most loans to have a monthly repayment rate plus interest, but the repayment schedule can be customized.

Pay off the loan amount in installments

Pay off the loan amount in installments

Accordingly, there are also repayment plans that initially provide for a repayment pause – this makes sense, for example, for entrepreneur loans, because you can then start repaying when the investment made starts to pay off. Repayment breaks are also possible with other types of credit, such as long-term real estate loans.

However, it is commonplace in the context of repayment that the banks usually request an initial repayment of at least 1% from the borrower – the repayment schedule is precisely defined in the loan agreement and once it has been determined, the borrower has only a few options for changes available.

Nevertheless, it is possible to negotiate with the bank about the repayment schedule if there is a prospect of a delay in payment or if there are general financial problems, because the bank would rather take a temporary repayment break, for example, bankruptcy of the Borrower who is at risk that the capital invested by the bank will be repaid only partially or not at all.

Borrowers mistake

Borrowers mistake

Borrowers often make the mistake of completely losing sight of the financial market once they have completed their loan. That this is rather unwise shows at the latest when the interest rates of other banks fall and it would be worthwhile to switch to another offer.

The whole thing is called rescheduling or follow-up financing, it should be noted to what extent special repayment rights are anchored in the loan agreement and whether or not the bank is entitled to a prepayment penalty if the loan is redeemed early.