Credit Despite Existing Credit

An existing loan is no obstacle to further loan application, provided the regular income is sufficient to service both loans. Particularly when purchasing expensive and long-lasting products, it is customary to take out additional loans under an existing loan contract. It should be considered whether the additional loan should be taken out from the previous lender or from another financial institution. A loan is only advisable against an existing loan if both the current and the new loan are for consumption purposes.

Top up the loan or take out a new loan

Top up the loan or take out a new loan

If consumers increase an existing loan, they apply for further lending from the previous lender. Most banks can top up if at least a third of the original loan has been repaid. The advantage of an increase is that the borrower pays its repayments to a single creditor. A prerequisite for the approval of a credit increase is that the customer has always met his liabilities from the previous loan contract in good time.

A returned direct debit, which has been settled after a short time, as well as a slight delay in transferring the credit installments to Credit bureau, is not reported, but is regarded by a financial institution as a reason for refusing to grant a new loan or to top up an existing loan contract.

When a supplier offers payment in installments, customers do not take out the additional loan from a bank despite the existing loan, but instead use the retailer’s partial payment offer, since this is almost always cheaper than a bank loan. When buying a car, it is also advisable to take out a special car loan, since it is cheaper than a consumer loan without a specific purpose.

Pay attention to the ability to repay

Pay attention to the ability to repay

Anyone who applies for a loan despite having an existing loan may fear a rejection based on the existing Credit bureau entries. Credit bureau actually stores loans granted, and the relevant information must be provided by credit applicants in the loan application anyway. In principle, consumers can take out a loan despite the existing loan; The only requirement is that the lender is convinced that all obligations can be duly repaid.

Ultimately, repayment of two different loans is no more difficult than servicing a single loan of a comparable amount. When applying for a loan during the term of an existing loan, the bank carries out the budget calculation taking into account the repayment that is already due. The borrower also checks whether he can meet all credit obligations as agreed. It is easier to repay the loan by agreeing a long term with correspondingly low credit rates.

Compare loan terms

Compare loan terms

Some credit institutions lend at interest rates based on the borrower’s credit rating. In this case, the application for a further loan is generally considered sufficient for the calculation of an increased borrowing rate despite the existing loan. So that the consumer does not pay an excessive interest rate for his new loan despite an existing loan, he compares the conditions of different providers.