What is the consolidation loan ? Does such a solution pay off to everyone? Let’s look carefully at this proposal. Whether this solution will be beneficial for us depends on many nuances, primarily on the current financial situation, whether we have possibly real estate that we will be willing to pledge as collateral for this loan. Although bank advertisements convince us to the benefits that result from the combination of all liabilities, to lower monthly installments, contrary to appearances, this decision will not always be beneficial for us.
Before you make a decision, it’s worth knowing that …
As it usually happens in advertising, everything looks beautiful: “lower interest rate on commitments accumulated in one installment”, “you will get back on your feet”, “you will go straight”, however, please note that you will pay a commission for granting such a welcome loan, the next commission you can become encumbered for the bank paying its consolidated liabilities for you.
Indeed – currently repaid installments will be combined into one, lower, but the repayment period will be extended, and what is connected with it? There are additional costs.
Another aspect worthy of our attention is that this type of credit should be sought when we are still dealing with repayments of payday loans, credit cards or credit cards, we do it regularly and we have no arrears, but we already anticipate that problems may appear.
If we want to use this solution when we have arrears, then we lose credibility in the eyes of the bank, and thus our chances of getting a consolidation loan decrease significantly. Therefore, the decision to use this solution should be made as soon as possible.
Even if we get a little bit stuck, this is not a hopeless situation, because banks nevertheless approach the granting of consolidation loans quite liberally and it is always worth a try.
Can we combine all the commitments?
There are no major restrictions in this matter. Consolidation loan can cover almost all the commitments which we have accumulated so far, any loans, quick loans, credit cards or chwilówki. The only condition we must meet is that we have adequate creditworthiness, or real estate, which we can pledge.
If we do not have real estate, banks usually offer between 50,000 and 100,000 USD, while when it comes to real estate, we can get a loan of 70% of its value. However, if it turns out that our liabilities exceed this value, unfortunately, but we will not be able to cover all our obligations with this loan.
Is the bank the only solution?
This is not the only solution. When we meet with a refusal to grant a loan, we can still take advantage of the offers of non-bank companies, which are still expanding their offer, meeting the expectations of customers. It turns out that they also offer consolidation loans.
Certainly, the conditions on which the loan is granted are slightly different from those proposed in banks, but non-bank companies are characterized by greater flexibility as to the requirements for borrowers.
What types of consolidation loans do banks offer?
The most popular and also the most advantageous for the borrower is a consolidation loan secured by collateral. However, it is intended only for property owners. They have a much lower interest rate than other proposed banking products, i.e. loans, cash loans, etc.
We can pledge any real estate, even the one already covered by the mortgage or purchased on credit. Then the bank to which we apply for a consolidation loan repays the previous liability in the previous bank and establishes a new mortgage.
Another, proposed solution is a consolidation loan , cash. This is a much less favorable decision. In this case, banks offer a higher interest rate, the amount we can get is much lower and the repayment period is shorter. The cash loan may be secured by a promissory note.
If you care about time, be well prepared before you go to the bank. For a financial advisor to correctly determine your ability to receive a consolidation loan , he or she must obtain comprehensive information about your finances from you.
Collect all documents regarding household maintenance, documents confirming the monthly financial burden and certificates confirming the amount of all your income. Complete the loan agreements and repayment schedule that you want to combine.
This way you will definitely save some time and the adviser will assess your credit standing faster. Make sure, however, whether this solution will pay off for you.