In recent years, credit consolidation has become a very popular term, constituting a large part of the offer of many banks and non-bank institutions. What is this widely advertised and promoted product? What truths are governed by the mechanism as a result of which, as banks and loan companies promise, we are to enjoy a lower, easier to repay installment?
If you belong to the group of Poles who, craving for information, enter the words ” credit consolidation what it is ” in the search engine, you’ve come to the right place – in our article we’ve collected the most important, the most important information on this subject and presented it in a compact, clear form. We invite you to read – a consolidation loan!
Get relief from too many loans
If you have several different credit products, you might want to seriously consider consolidating your liabilities. What is loan consolidation? Let’s explain it in a few simple steps:
First of all, we take into account all our loans, credits, credit cards, account limits, and payday loans – we check what amounts we have to pay for each of them. Note, if our debts include loans – installments or payday loans – contracted in parabanks, in most cases we will not be able to apply for consolidation in a traditional bank. However, there are also those where it is possible to consolidate payday loans provided that at least one other liability comes from the bank.
Secondly, these commitments are added together and the resulting amount is repaid by the bank or non-bank institution that consolidates. In this way, we are now only one entity’s debtors, we repay only one installment per month. So, in a way, we are replacing the old loan with a new loan, but we must not forget about the benefits of loan consolidation. What is its beneficial effect? This is clearly seen in the next step.
Thirdly, therefore, the new installment is calculated as follows: the total sum of liabilities is divided into the number of months during which we are able to repay the new loan. The longer the loan repayment period, the lower our unitary installment will be. In this way, we can reduce the installment to a level where it will no longer be embarrassing for us. Of course, we agree even on a long-term loan agreement – many banks and loan companies offer periods of up to 12 years – but thanks to this the newly created commitment is much lighter for our budget.
Not without significance is the fact that we have to remember only one installment once a month, we contact only one institution and store only one file of documents. Payday loan consolidation via https://paydayloanconsolidation.net/ also has an important psychological aspect: organizing and harmonizing financial obligations in most cases is a great relief from too many loans and motivation to pay off debts. So we see that the answer to the question ” consolidation what it is ” brings hope for those who find it increasingly difficult to deal with debts.
Credit consolidation – what is involved, who can benefit?
What is loan consolidation and what makes this solution help organize our finances and get out of debt? How can the combination of several of our commitments result in the creation of one, in addition, a lower installment? Let’s look at this mechanism.
Nowadays, access to various credit products in Poland is relatively easy – we can borrow from banks as well as parabanks or loan companies, we can take cash loans, loans for companies, student loans, mortgage loans or loans for the purchase of a car, open debit limits and credit cards in our bank accounts and use even several credit cards at once. A separate category is the so-called payday loans, i.e. loans granted for lower amounts and for a shorter repayment period, usually with a minimum of formalities and for people who already have problems with their credit history. All these products have one thing in common: they have to be repaid regularly, which over time if there are more obligations, can become a big problem.
Not coping with the repayment of consumer obligations today, in a few years, we may have a problem getting a loan to buy a property or build a house. If it is getting harder and harder to reach our home budget, we should start looking for solutions that will protect us from financial catastrophe. These include, among others, credit consolidation. What product is this and does it really help you get out of debt? In this way, it is most often advertised and it must be admitted that combining our existing commitments into one helps to organize the home budget by converting into one, lower installment. However, this is not all.
Loan consolidation and transfer of credit to another bank
As you can see, loan consolidation is a proposal for everyone who has loans whose repayment is becoming difficult or even impossible for them. It is worth noting at this point that the consolidation mechanism can also be used for a single liability – we don’t add anything then, but we can transfer the debt to another bank or non-bank institution that will pay it back for us and then spread a new loan for a longer repayment period.
In this way, our single installment will decrease, and the obligation itself, as in the case of classic consolidation, will become easier to pay back. In this case, as well as in the case of combining more loans, it is also possible to choose additional funds for any purpose. This amount will be added to the consolidation amount and divided by the number of installments requested by us. Let’s add, however, that this option may not be available to everyone and depends on our creditworthiness.