Banks tempt customers with attractive credit and loan offers. Unfortunately, incurring too much more quickly can lead to serious financial problems. Debt consolidation is a good way to make repayment easier.
Unfortunately, over 100,000 people have serious problems with regular debt repayment and are in arrears with payments over 90 days, while 117.5 thous. borrowers have recently encountered the first difficulties in meeting repayment deadlines. In this case, you should respond as soon as possible – if the problem is the overlap of many different obligations, you should think about a consolidation loan.
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A consolidation loan is a special-purpose loan, which aims to combine many liabilities and replace them with a new product. The mechanism of this tool is very simple – the funds originating from it are automatically allocated to repayment of the loans included in the application.
The customer, in turn, repays one liability, so he pays only one installment every month. Debt consolidation service is much easier. You can also adjust the repayment terms to current possibilities and take advantage of other options, such as applying for additional funds that will help you fund your home budget.
When should you think about a consolidation loan?
Borrowers who use many different credit products and have an increasing problem paying back should think about taking a consolidation loan. It is worth acting as soon as possible and does not wait until it is impossible to fulfill the obligations of the debtor.
From the financial institution’s point of view, the consolidation loan is a new commitment and the client will undergo a standard verification procedure in the process of granting it. First of all, creditworthiness is assessed. Negative entries in BIK may prevent obtaining financing or significantly worsen the conditions offered.
Easier repayment, additional options
Taking a consolidation loan offers many priceless benefits for a person who is struggling with financial liquidity problems:
- Debt management – many different obligations are not only high costs but also chaos. In this situation it is difficult to assess the actual expenses, it is easy to make mistakes, which results in further delays in payments. One loan agreement and one installment guarantee transparency and facilitate loan repayment.
- Lower installments – although as a result of taking a consolidation loan the amount of debt will increase, the extension of the repayment schedule will let your home budget breathe. A larger number of installments will reduce their value, so when deciding on a consolidation loan, we will pay less than for many different liabilities.
- Additional cash – most banks give their clients the opportunity to obtain additional funds for any purpose when applying for a debt consolidation loan. An injection of cash at an interest rate lower than standard consumer loans can help you pay off your loans. It will also be definitely a better option than making another commitment.
What can you consolidate?
Another advantage of consolidation loans is a large number of products that can be consolidated. In addition to standard cash and installment loans, credit card debt and current accounts, more and more banks also offer consolidation of loans taken from companies outside the banking sector, i.e. popular payday loans. It is worth getting to know the offer of a specific institution and adjusting the selection to individual conditions.
Debt consolidation – it’s not always worth it
Although in many cases a consolidation loan will be a godsend for those in debt, it will not always be the case. First of all, you should approach it as a completely new commitment and carefully assess the conditions proposed by the bank. Attractive interest usually does not cover all costs.
Meanwhile, the high commission for granting a loan can significantly affect the profitability of the entire project. You should also analyze the real costs and characteristics of individual debts: it may turn out that abandoning the consolidation of some of them will be a definitely better solution.
Debt consolidation loan
Problems with paying off financial obligations are certainly one of the most stressful situations in life. In their face, however, passivity is the worst. It is worth considering, first of all, taking a consolidation loan for those in debt. Thanks to it, many different liabilities (such as consumer loans, credit cards, and current account debt, and even loans offered by companies outside the banking sector) are replaced with a new loan.
This is not only a significant organizational simplification – the possibility of extending the repayment period translates into a reduction in monthly installments, most banks also offer their clients the possibility of obtaining additional funds. It is worth applying for a consolidation loan as soon as possible – it will be determined by the creditworthiness assessment.