It’s quick and easy with direct loan consolidation
Do you have to pay off some debt? Mortgage loan for a flat, car loan, installments for furniture and household appliances, cash loan for holidays, credit card debt… A varied schedule of installments may cause confusion, keeping time limits somewhat cumbersome, and the home budget with such amount of debt often “breaks in the seams. ” direct consolidation from the lender be a solution to problems. Consolidation loans have their own light and dark sides. How to choose an offer that will actually be profitable?
What is a consolidation loan?
A consolidation loan is a solution for people who are very indebted, repay a few or a dozen different installments in banks, and the growing interest rate makes them have problems with timely payment of liabilities. In this case, the bank may grant one loan to which it will repay other customer’s debts. From that moment, he will pay only one installment. The lower interest rate means that the amount of the consolidation loan installment is usually lower than the sum of the debts repaid to date.
Who has the chance to consolidate?
Consolidation loans are directed towards indebted persons. Therefore, it is unlikely that the bank will refuse you such a loan by issuing a decision due to lack of creditworthiness.
Before talking with a consultant, however, it is worth gathering all the necessary documents in order to maximally speed up the loan (it has to be remembered that the interest on unpaid installments is growing all the time). One should prepare, among others:
- documents confirming the number of earnings (certificates from the Tax Office, copies of employment contracts, certificates of warnings issued by the company, etc.)
- repayment schedules along with the amounts of current loans
- data on permanent loads (bills for rent, electricity, water, etc.)
- information about real estate that may become collateral for a consolidation loan
It is worth remembering to start applying for a consolidation loan as soon as possible, and not only when we no longer pay off loan installments – then the bank will consider us an unreliable client (especially when our name will be entered into the database).
Advantages of consolidation loans
The main advantage of consolidation loans is the reduction in the number of installments, which may be the only solution for many people slowly falling into a debt spiral. Lower installments most often result from two facts – an extension of the loan period (the debt can be spread even 30-40 years) and interest reduction, when the consumer combines a mortgage with high-interest loans (unpaid credit card, cash loan). The advantage is also paying one installment, which eliminates the problem of guarding deadlines against the repayment schedule of particular debts.
Disadvantages of consolidation loans
You have to pay for debt consolidation. Spreading the debt on more installments automatically extends the repayment period and the total loan cost (the bank calculates more interest).