Around 20,000 loans are granted in Germany every day. Many of them have been planned for a long time and the loan amount has been calculated precisely. Despite all of this, it can always happen that the loan taken out is not sufficient to fully implement the planned project. Then – as far as possible – an increase in credit must take place. We have summarized how this works and what you should pay attention to here.
When can credit increase become an issue?
Even if you plan and calculate exactly in advance, it can always happen that the loan amount raised is not sufficient to fully implement the planned project. Real estate loans or refurbishment or renovation loans in particular are known to ensure that the costs incurred do not coincide with the loan amount and that additional financing must therefore take place. If you can do this by simply increasing the loan, everything is fine. However, if the increase results in completely different credit terms, this can be quite uncomfortable for the borrower. Because then his monthly credit load increases and the repayment becomes more difficult.
How should I proceed?
If you want to increase a loan, you should always first check whether your monthly budget allows it at all. Does the income match the expenditure and is there enough money available to bear the greater credit burden?
Many banks and savings banks offer the loan increase directly through a service employee of the relevant bank. It is therefore not necessary to first make an appointment with a consultant who will then advise you on the increase and initiate the appropriate routes. Rather, it is sufficient if a service employee is informed about the planned increase. The latter then looks at the current loan and its course, queries Credit Bureau and then decides at short notice whether an increase is possible or not.
As a rule, the term is not extended, but the monthly rate is increased. On request, a change can also be made in the runtime in individual cases. However, this can always lead to a change in the effective interest rate, which leads to a completely new loan calculation. We therefore only recommend conditionally adjusting the term because it usually brings more disadvantages than advantages for the borrower.
Is increasing an existing loan better than a new loan?
Whether it is better to increase a loan or to take out a new loan depends on several factors. On the one hand, as a borrower, you always want to take advantage of a cheap offer. In addition, borrowing should be simple and not waste time.
Increasing a loan can therefore always be the best choice if you can continue to benefit from the low interest rates that the loan entails. If the interest increases as a result of the increase, you should always first check whether you are not getting a new – additional – loan on better terms. Interest rates can increase if the loan amount is increased significantly or if your conditions for borrowing have deteriorated.
Even if you can easily increase the loan, you should always get an overview of other offers beforehand with the help of a loan calculator. Perhaps there are now significantly better offers and increasing a loan is not a very good option because, for example, rescheduling is much more advisable. So it is worth taking a close look and comparing here before simply increasing a loan. After all, in the end you not only want to have more money at your disposal, but you also want to have to spend as little additional money as possible to repay the loan to the bank.