Due to various life circumstances sometimes on the fly changing financial decisions and adapting to new conditions. Instead of quick decisions, it is best to first consult with bankers.
We raised a bank loan, paid it off regularly and we are ready to set aside a certain amount of their income for a while, anyway, so we planned when decisions on borrowing. However, in our life have emerged some new situations; we have gained a family heirloom, the employer has paid us a significant severance package, we sold real estate or a car, or for any other reason, once we have additional funds sufficient to pay all of its debts. These are definitely times when we start to think about changes in our financial obligations.
Life without debt seems like a dream come true and that what come to mind the early repayment of loans. But rather than walk fast with a decision, we should be familiar with some basic details of such an arrangement. Also, it would be good to calculate whether it is better to pay the loan or continue to repay, and the money we have to invest and thicken their financial security.
With Banks for Advice and Accounting
At the beginning it will be understood that certain changes in loan repayment bring some new expenses. So it is best to visit the bankers to us according to our plans and ideas that calculate the most cost-effective solution for us. As a user of certain lines of credit, primarily, we must understand what constitutes a loan repayment plan. That we have received during its implementation and what you pay.
An Important Proportion of Principal and Interest
The ratio of principal and interest that make up the monthly annuity, is different during the period of loan repayment. Consequently, bankers’ say that the bridging loan has most sense in the beginning of the repayment period. Because then the annuity consists mainly of interest, but later repay this relationship changes in favor of equity. Earlier prepayment of loans ultimately will pay a much smaller amount of interest and the total cost of the loan will be much smaller.
In Which Cases We Pay Compensation?
Also, in the decision of prepayment of loans should be considered and compensation that will give us the bank in certain cases charge. The amount of compensation depends on the policies of the bank and the type and purpose of the loan.
Partly or Full Repayment?
The loan can be prepaid in full or in part. If you decide to partial repayment, the bank will we reduce the principal amount of which can shorten the repayment period while maintaining the same amount of monthly obligations or we can reduce the monthly obligation with retained the same repayment period.
If you have the opportunity to cover part or all of the debt to the bank, whether we decide to use it alone, the best advice is to look for the bankers. It is their duty to provide us all the information, calculate the costs and advise the best solution.