Are you struggling to repay your loan on time? Well, as it turns out, you shouldn’t have to—because you’ve got plenty of options.
Loan renewal can be an excellent option for borrowers who are having difficulty meeting their loan obligations. It works by allowing you to extend the terms of your loan, giving you more time to repay your debt.
But why should you consider loan renewal in the first place? In this article, we’ll explore six reasons why loan renewal might be the right choice for you. From lower monthly payments to improved credit scores, we’ll cover all the benefits that accrue when you renew a loan.
So if you’re feeling overwhelmed by your loan payments, worry no more! Keep reading to find out how loan renewal could help you get back on track.
Understanding Loan Renewal
Before we dive into the benefits of loan renewal, it’s important to understand what it is and how it works.
In simple terms, loan renewal is the process of extending the terms of your loan agreement. It’s really that easy. When you renew your loan, you essentially take out a new loan to pay off the old one. This new loan has a fresh set of terms and conditions, including a new interest rate and repayment schedule.
It’s important to note that loan renewal is not the same as refinancing a loan. Refinancing involves taking out a new loan with a lower interest rate to pay off your old loan. Loan renewal, on the other hand, simply extends the terms of your existing loan.
So although refinancing can be a great option for some borrowers, it’s not always possible or practical. Loan renewal is a better alternative to consider if you’re struggling to keep up with your loan fees and payments.
Benefits of Loan Renewal
Now that we know what a loan renewal is, it’s time to explore some of the benefits it offers borrowers. These are just a few of the many reasons you might want to renew a personal loan, but we think they’re among the most attractive.
1. Lower Monthly Payments
It probably goes without saying that one of the most significant benefits of loan renewal is that it can lower your monthly payments.
When you renew your loan, you typically extend the repayment period, which reduces the amount you owe each month. By reducing your monthly payments, you’ll have more money available to cover your other costs.
However, it’s important to keep in mind that extending your repayment period also increases the total amount of interest you pay over the life of the loan. So while you may have lower monthly payments, you’ll ultimately pay more in interest over time. That’s why it’s so essential to weigh the pros and cons of loan renewal carefully.
2. Improved Credit Scores
Another benefit of loan renewal is that it can help improve your credit score.
When you’re struggling to keep up with your loan payments, it can have a negative impact on your credit rating. Late or missed payments can lower your score, making it harder to qualify for future loans or credit cards.
By renewing your loan, you’ll have the opportunity to bring your payments up to date and improve your credit score. As you make your payments on time, your credit rating will gradually improve, making it easier to qualify for credit in the future.
3. Flexibility in Repayment Terms
Loan renewal can also offer borrowers more flexibility in their repayment terms.
When you renew your loan, you can negotiate new terms with your lender that better suit your needs. For example, you may be able to lengthen the repayment period, lower the interest rate, or switch from a variable to a fixed interest rate. This is especially helpful if you’re dealing with a payday loan that leaves you very little repayment wiggle room.
By negotiating new terms with your lender, you can create a repayment plan that’s more manageable for your budget. This can help you avoid defaulting on your loan and facing the consequences that come with it.
4. Avoiding Default and Late Fees
Speaking of defaulting on your loan, another benefit of loan renewal is that it can help you avoid default and late fees. When you’re struggling to keep up with your loan payments, it’s easy to fall behind and incur late fees or default on the loan altogether.
By renewing your loan, you’ll have the opportunity to get back on track with your payments and avoid these fees. Plus, defaulting on your loan can have serious consequences, including damage to your credit score and potential legal action from your lender.
5. Enjoy Better Loan Terms
The amount of leverage you can get from a loan renewal really depends on your creditworthiness. It also depends on the lender’s interest in helping you repay your debt on time.
By quickly repaying your original loan, it demonstrates your creditworthiness and helps persuade your lender to provide you with a loan renewal with lower interest. You can also raise your credit score to increase your chances of securing more favourable loan terms.
6. Leverage a Greater Loan Amount
By agreeing to a loan application with a renewal clause, you might secure a higher amount than you would normally qualify for. The reason is that some lenders might not immediately grant you the entire amount you’re looking for.
But they may be willing to divide the amount over several loans via a loan with a renewal feature. By repaying your loan’s original terms, you show that you are a responsible borrower. This may increase the lender’s interest in extending you the amount you originally desired, spread out over multiple loans. And that makes everyone happy!
Consider Tekaloan for Your Loan Renewal
Loan renewal can be an excellent option for borrowers who are struggling to keep up with their loan payments.
By extending the terms of your loan, you can lower your monthly payments, improve your credit score, and negotiate new repayment terms that better suit your budget. Sure, there can be potential drawbacks to loan renewal, but it can be an effective way to avoid defaulting on your loan and facing the consequences that come with it.
If you’re considering loan renewal, you’ve come to the right place. At Tekaloan, our team of experienced professionals are here to help. Please contact us today, or fill out our loan renewal application, to see how we can help.