People when applying for credit, projected to be able to cancel it, but for many reasons fail to do so and fall into the problem of debt. That is a compelling reason that makes people asks the refinancing option.
Therefore, it is a measure of salvation to the customer of the bank, since the bank will not give money for you if they know you will not return. But choosing a refinancing has risks that would mark in the financial system.
We should note that when doing a refinance; alter the credit history of the client, as it has failed to pay the debt within a certain time. If a person has a debt to early to be invaluable, should immediately approach the bank for refinancing, because if you miss the time, the bank taking a tougher line with the debtor.
If you do not cancel the debt, the customer becomes a person with qualification of “doubtful” or “high risk”, so that not only the bank to which it is linked, but other banks consider it as a risky customer. Another risk is the cost of credit or restriction of access, and that’s a difficulty that sooner or later it will be expensive when you need high finance.
Refinancing is a respite for the client but must pay much more because he has no alternative. The interest rate is raised according to the bank, and depending on the situation, debt can end up costing up to 3 percentage points more than the original cost.
Opt for the refinancing of debt, also affect the rating of the customer, and that would result for the rest of the financial system, the customer is an unreliable person. And if you want then release a loan, and will be more expensive.
Finally, it is advisable to have a small savings, that amount will serve as a “cushion” against any emergency that may protect to avoid falling into the refinance.