A consolidation loan is a cheaper loan? Can you benefit from loan costs on loan consolidation? In which bank can we consolidate our loan commitments?
In the case of consolidation loans, as in the case of other loans, we must reckon with the fact that before the bank decides to grant a loan, it will examine our creditworthiness. The credit for consolidation will not be granted to people who do not have sufficient income, as well as those who have arrears in payment of liabilities.
Banks also do not consolidate the debt that we have in non-banking entities. Consequently, installment loans in Internet loan companies cannot be included in the consolidation.
Consolidating loans are granted up to a maximum of 200,000 euro with a maximum lending term of up to 10 years. As in the case of cash loans, consolidation loans via the internet are also available in this case.
During consolidation, it is a good idea to look at the offers of banks, because some of them reserve the maximum amount for which you can get such a loan and for the time when you can spread your installments.
Find out more about payday loan consolidation companies
Not all financial liabilities can be combined into one. You can not consolidate non-bank loans. Banks offering consolidation loans may exclude from the consolidation also some credit products, eg debt in ROR. At that time, the only option is to match the cash under the consolidation loan and repay these liabilities on your own.
Payday loan consolidation is aimed primarily at people who have many payday loans. If we want to improve financial liquidity, then it is worth considering payday loan consolidation. Take a look at your options.
Can you save on a consolidation loan?
In the survey conducted on the, 84% of respondents answered in the affirmative. Which is not entirely true. A cash consolidation loan can be only slightly cheaper than the average loan or cash loan offer. The main assumption of consolidation is not to reduce loan costs, but to increase liquidity. This is done by reducing the loan installments in relation to the sum of the loan installments paid by consolidation. It is possible not by creating a ” super attractive ” offer, but by extending the repayment period.
You’ll save a lot on loan connections
One of the well-known financial portals advertises consolidation loans: ” thanks to the combination of debts into one loan, we can save a lot – up to 30% on monthly installments.”
Save on credit installments? This is only possible when the total loan costs are reduced by 30%. Decreasing the loan installment by 30% does not mean that the loan is cheaper by 30%. On the contrary! Such a loan is more expensive!
The reduction of the loan installment is very important when we pay in aggregate too large loan installments and we are looking for the possibility of regaining financial liquidity. But a SIGNIFICANT reduction of the new installment is only possible if the loan repayment period is extended. And this is associated with higher interest on the loan.
An exemplary consolidation of € 30,000 for 4 years is a monthly installment of approximately € 720, with an 8-year repayment period of approximately € 390. Indeed, the loan installment is smaller, but for 4 years – 48 months longer interest will accrue on the borrowed capital. And that means we give the bank more money.
But it is not everything. The new loan is also a loan commission, possible insurance, fees for early repayment of consolidated liabilities.