In two, it goes better, says an old proverb. This also applies to finance and repayment of obligations, such as payment for goods purchased in installments, credit cards, loans… In such a case, it is always better not to be alone to repay and have two incomes and a greater guarantee of security. Whether you are two or you are on your own, one thing is for sure – it is easier to get a single loan than a few from different providers. Learn about consolidating loans and credits.
The term loan and credit consolidation is commonly encountered, but laymen still do not perceive it as a synonym for effective debt management. Obviously that is why we use less people than it could in consolidation. Yet, as shown by a survey by the banking Association, more than a third of households repay two or more loans. Consolidation would relieve them.
What is the “magic” of consolidation?
What is the benefit of borrowing consolidation? It is a merger of all drawn loans into one provided by a single financial institution, usually a bank. It will pay the outstanding amounts to other providers for you and will combine all your loans into one.
On the market, you will also find the consolidation of loans of non-banking companies. However, they should be more cautious. Merging with a bank will achieve better conditions and almost certainly lower interest. In addition, most banks will lend you some money beyond existing obligations. One loan at one bank means less administration and easier administration.
Consolidation usually means lower interest. And so fewer worries and more money in the family budget.
What products can be consolidated and what to expect?
Banks will consolidate your liabilities, ie loans, credit cards, hire purchase loans or overdrafts, and can also consolidate non-bank loans. Conversely, mortgages can only be refinanced, not merged.
The positive thing is that people find their way to consolidation. According to a survey, 25% of people prefer consolidation in solving financial difficulties and impending insolvency. This is just like those who would borrow money from family or acquaintances. The management (31% of respondents) is negotiating to adjust the number of installments.
Interest rates on loan consolidation are compared to those for classic loans. Banks provide them on the same terms and often interest rates are even lower. Beware of other conditions: For example, a link to negotiate another product or high early repayment charges. Just like a loan, you can arrange online loan consolidation.
Consolidating a loan with a bank is safe
At first glance, however, it is not possible to determine the most advantageous loan consolidation. The resulting price enters a number of factors and whether you want extra money. Consolidation parameters calculator, usually available on each bank’s website, calculates itself and tells you how much you will save.
The safest thing is to bet on consolidation from the bank.
Dealing with the bank is a bet on seriousness, but also stricter rules. You must provide proof of receipts, existing loan agreements, and the bank will consult the debtor’s register. Consolidation of loans with a record in the register that the borrower has can, of course, affect the creditworthiness assessment process of the client.
Banks thus protect not only themselves but also the borrowers themselves, who are on the edge of the debt trap.
Beware of loan consolidation without a register and proof of income.
On the other hand, there is the possibility of non-bank loan consolidation, where you save a few formalities, but you can burn yourself. There is no cause for concern for established non-banking companies, but who is looking for, for example, consolidation of loans without a register or consolidation of loans without proof of income, the threat of encountering a risky provider is increasing. A step to save money and worry can suddenly become the opposite.