When deciding to take several loans or credits, we must be aware that the repayment of these liabilities will be a considerable financial burden for us. Before it turns out that the situation is beyond us and out of control, it is worth looking for a solution that will help us repay loans and plan the household budget. A consolidation loan is such a solution. hpvtruth.org has more details
Consolidation loan – what is it?
Consolidation means a merger , so if we are talking about debt consolidation , we mean combining two or more financial obligations into one. The consequence of this action is the unification of the interest rate and other terms of all loans that we have to pay off. It also involves extending the repayment period . Another name used for this financial product is the consolidation loan . The offers of this type of loans are currently found in most banks, as well as some non-bank companies.
Consolidation loan – how does it work?
The consolidation loan is granted for the repayment of other financial liabilities , therefore we can not spend the money that the bank will grant us, for example to buy a flat or a new car. Even if someone would have such a crazy idea in their heads, there is no chance for it, because the bank transfers the money directly to the accounts of the institutions in which we are indebted.
There are two types of consolidation loans for indebted: cash and mortgage . The former are granted in the long-term, we can repay them for up to 10 years. On the other hand, mortgages have a lower interest rate, but in a situation when we are unable to continue repaying this loan, the bank takes over our house or other real estate on which the mortgage was established.Deciding on any of the variants of consolidation loan, we no longer have to remember about repayment of several installments at different dates. There is only one fixed installment left , which is a big help, but it must be remembered that to get out of debt you also need to change your approach to finances , reduce expenses and take into account ways to increase your income.
How to get a consolidation loan?
First of all, we must be credible for the bank to decide to help us in this way. As in the case of considering an application for any other loan, the bank checks our credit history and examines our ability to pay this type of liability. The timely repayment of loans , including non-bank loans , and the frequency of borrowing are also taken into account . It is obvious that the consolidation loans are for indebted, that’s why our BIK account will not be spotless, but it is the best way to determine the risk. In addition, we must provide proof of the amount of our income .
Some wonder if you canconsolidate a consolidation loan . Theoretically, there is such a possibility, however, certainly not give us a bank in which we are already in debt.
Consolidation loan – is it worth it?
When deciding to take a consolidation loan, we must be aware that in general, we will pay more than if we would pay off each of our financial liabilities separately. The bank that grants such a loan wants to earn first and finally is not a charitable institution. If we are sure that thanks to the smaller monthly installments we will manage to get out of financial problems , then it is worth taking the risk.It is very important to choose the cheapest consolidation loan. Banks offer very different conditions, which is why they should be looked at closely. It certainly does not pay to decide on an online consolidation loan offered by little-known non-bank companies.
How to look for the cheapest consolidation loan?
The products discussed by us are offered by virtually all banks, so finding any offer should not be a problem. However, if we want to approach this reasonably, we should use the tool which is a consolidation loan calculator . Thanks to it, we can independently calculate the amount of installments and their repayment period. We can set all the parameters ourselves by searching for the most optimal output for us. The consolidation loan calculator works in a very simple way and no one should have a problem with its service.
Another step that is also worth doing is analyzing the ranking of consolidation loans . Such combinations make it possible to get acquainted with the offer of many banks in one place. The chance is lower that we will forget or overlook an exceptionally advantageous option.In some cases, consolidation loans are a salvation against a spiral of debt , in which many people lose control over their finances. So if we want to use this lifeline, remember that it is the last loan we take, otherwise we will never deal with this problem.