If you accumulate more than one loan, interest can get high. In this case, consolidation is a good solution. Existing loans will be taken over by the chosen bank and combined into one large, often more advantageous, loan.
What is loan consolidation?
Loan consolidation is actually a merger of loans. It does not have to be just the loans and loans themselves. It is also possible to merge overdraft or credit card debts. The consolidation of loans can be significantly reduced by the amount of monthly installments. The interest and the total amount payable are also usually reduced.
People often confuse the difference between a debit card and a credit card, so it pays to read the difference between a credit card and a debit card.
Of course, the bank may not accept the request to merge the loans. There are several factors that can increase your chance of success. These include:
- status of “creditworthy” client – ie a client able to repay a new loan
- already present loan with a given bank – often people turn to consolidate loans to a bank where they already have a loan (usually the highest one)
- rather than a request, it is better to send a question – if a bank rejects a credit merge request, it is written to the register, reducing the chances of compliance with other banks
It is worth seeing if the bank is already offering existing consolidation in Internet banking or in the Finance Manager application. For example, internet banking from Lite Lender called George based on personalized settings will, among other things, alert the client if it is appropriate to consolidate non-bank loans.
When does it pay off?
Consolidation is a good solution for cases where the family budget so Lite interest on several loans that they “extinguish” the majority of funding goes.
In this situation, people often subscribe to a non-banking organization for another loan to repay previous loans. The classical banking organization treats such loans very carefully. This is a very dangerous situation, any fluctuation (eg loss of employment, accident) can put the debtor in considerable trouble. In addition, execution or bankruptcy may follow.
Therefore, it is always better to see if credit consolidation can help relieve the monthly budget. It also allows for a better overview and control of existing loans and the number of repayments. If the above-mentioned problems arise, one would only negotiate with one bank about the possibility of postponing the repayment.
The difference between refinancing and consolidation
Consolidation and refinancing. Often these two terms are wrong. This is a similar purpose, but the difference is the number of loans. Refinancing is arranged for only one loan, while consolidation is possible for 2 or more loans. Both cases have the potential to save money in installments.
Where to set up the most advantageous consolidation?
There are many banks that offer mergers of loans. Today, however, you no longer need to run the banks personally or visit each bank’s website separately to get the best loan merger. Consolidation can either be compared or you can enter data into the Internet consolidation calculator.
Using the Loan Comparison Chart, you can keep track of various interest rates, fees, and maximum consolidation rates. The most advantageous loan, however, is to choose yourself. On the contrary, the consolidation calculator will show the menu from the consolidation of banks, to allow for the situation. So you can choose the cheapest loan.