If you have a current credit and at the same time an additional capital requirement, you have in principle the possibility to increase your existing credit. A credit increase can be carried out by most banks under certain conditions, but you should pay attention to numerous aspects, especially as a borrower. The following guide goes into detail on the topic of "credit increase" and includes important aspects as well as numerous tips and tricks around the processing.
If you have a current loan and at the same time additional capital requirements, you generally have the option of increasing your existing loan. A loan increase can be carried out by most banks under certain conditions, whereby you should pay attention to numerous aspects, especially as a borrower. The following guide goes into detail on the topic of "credit increase" and includes important aspects as well as numerous tips and tricks around the processing.
Why it can be worthwhile to increase a loan?
For the borrower, a loan increase can be advantageous for various reasons. If there is a need for additional capital in addition to a current loan, the credit increase is often much easier than the conclusion of a second credit agreement. In addition, by increasing the loans, borrowers have the opportunity to repay the required borrowed capital with a significantly lower monthly burden. In the case of repayment of individual loan contracts, it is common that each loan is serviced at a minimum rate set by the bank (the minimum rate is calculated based on the maximum loan term, which varies from bank to bank). This requirement becomes a problem especially if the borrower has agreed to an above-average repayment rate for the first loan. When increasing the credit, the monthly repayment rate can be completely re-determined, so the borrower is much more flexible compared to signing a new credit agreement. In addition, from the bank's point of view, it is often much easier to increase an existing loan (this is related to internal bank requirements as well as loan application programs). Since the credit increase always legally results in a new credit agreement, the bank usually also calculates a new interest rate. Depending on the interest rate level, a comparison of the terms and conditions "Old contract vs. The "increased credit agreement" has advantages for the borrower.
These aspects must be considered around the credit increase
With regard to a desired credit increase, borrowers must consider numerous aspects. First of all, it is important to know that a loan increase can only be carried out if the borrower also has sufficient creditworthiness for the desired, higher loan amount. Here it depends above all on the repayment ability or debt service ability. If, when applying for the original contract, the borrower was already "running short" (monthly liquidity surplus was only just sufficient for the repayment installment required by the bank), it is usually not possible to increase the loan amount if the original loan amount is exceeded. In such a case, the outstanding balance can be adjusted to the original amount at most. In the context of a credit increase, which is possible at any time only with a private credit and/or a Baufinanzierungskredit without debit interest connection, it must be paid attention beyond that to the fact that the borrower does not lose rights granted by the bank. If, for example, the bank has granted him a special unscheduled repayment right or granted him a blank credit, the borrower should make absolutely sure that he retains these benefits in the course of the amended loan agreement as well.
The necessary steps to the desired credit increase
If a current loan agreement is to be increased due to further capital requirements, a personal discussion must first be sought with the respective credit institution. The options for increasing the loan can only be discussed directly with the respective bank, and since the increase involves the conclusion of a new loan agreement, the bank must always agree to the desired change in the agreement. First, it is common that the bank will ask for the reason for the desired credit increase. The borrower should explain as comprehensibly and authentically as possible why the desired credit increase is to be carried out. The next step is always about the feasibility or presentability of the desired loan request. Each bank has its own criteria for granting credit and requires different minimum rates in this respect. Within the framework of fixed maximum terms of, for example, 60, 72 or even 120 months, the borrower's creditworthiness must permit an installment amount that will lead to full repayment even after the credit increase. If the ability to service the debt required by the bank is given and also fit other criteria such as SCHUFA information or security – so there is usually the desired loan approval. The bank then draws up a new loan agreement and ensures that the increased loan amount is made available to the borrower as quickly as possible.
Conclusion: In the event of a further need for capital, borrowers generally have the option of increasing an existing loan. The credit increase can have a positive effect for the borrower in various ways, which is related, for example, to the fact that he can obtain a new and possibly more favorable interest rate and can repay at a much lower rate compared to the repayment of individual credit agreements. If you want to increase an existing credit agreement, the first step should be to seek personal discussion with the respective bank. The bank checks whether there is sufficient debt service capacity even for the increased loan amount, and the most important thing is that the borrower can safely bear the minimum rate required by the bank.