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A consolidation loan which bank to choose and what is it, this payday loan consolidation? Is a payday loan consolidation a good solution for indebted people who have several loans?
Yes and no. In the article below you will find the advantages and disadvantages of consolidation… You will learn what a consolidation loan is and in what situation to use it.
A consolidation loan is the same bank loan as cash or cash loan. It really becomes. another debt. It differs in that the money that the bank lends us is intended to repay other bank loans or loans. And the bank determines which loans and loans we can consolidate. The vast majority of consolidation loans are used to consolidate debt resulting from loans and cash loans, followed by car loans, housing loans, and installments.
Some of the banks also allow you to include credit cards and loans in personal accounts for consolidation. In the case of consolidation loans, you do not receive money in your hand (unless it is a loan with additional cash, but more on this later in the entry). The bank transfers money to banks in which you have debt. In this way, credits and loans that you have in other banks are repaid with a new loan: you now have only one loan, with one payment date in the “new” bank.
Types of consolidation loans
We can distinguish two types of such loans: a cash consolidation loan and a mortgage loan. In the case of cash consolidation loans, the interest rate on the loan is similar (or slightly lower) to loans and cash loans. They are granted up to PLN 200,000 and for a period of up to 10 years. Mortgage consolidation loan: a loan granted for a longer period (even 30 years) and much larger amounts. The interest rate is lower (at the level of mortgage loans), but the property is secured (eg a house or flat). The real estate may be part of the consolidation (and thus the loan security) or only with the loan collateral.
Advantages of consolidation loans
Banks, in order to gain new customers, present primarily the benefits of this type of solution:
- one installment instead of several,
- the installments are much lower than the sum of installments paid so far,
- the high amount of unsecured loans,
- long loan period,
- additional cash (under the loan, i.e. a new loan included in the consolidation) for any purpose.
Is a consolidation loan always a good solution for everyone? After all, we often hear about the fact that one should not be overly indebted, and further credits and loans can only lead to a debt loop? Without “embracing” our home finances and sanction, no consolidation will help us. Above all, you should think about how to heal your household finances to make more money in your household budget. A consolidation loan will certainly help us improve financial liquidity, but it will not eliminate the debt problem. It is, therefore, necessary to simultaneously reduce expenditure and start planning it in a short and long time. We have to learn to save – less spending – and putting aside money, not just for a black hour. It may turn out that in order to balance the budget, it will be necessary to look for new incomes. Every loan, not only a consolidation, is for people… rich: you give away much more than you borrow.
Expensive consolidation loan
This is a beneficial solution in a few cases, which must be supported by the additional measures mentioned in the first part of the article (saving). The decision on a consolidation loan must be made when we know that in the near future we will have difficulties in paying the loan installments. No one is a fairy, but some things should be anticipated: new, long-term expenditures will appear; there will be a significant reduction in income received, etc.
An important principle when choosing any financial product is to compare and analyze it before making a decision. Also in the case of consolidation loans. Consolidation loans and great offers are very beneficial, but we also find weak offers, to put it mildly. In any case, we are not only driven by advertising (emotionally) only to the issue of credit should be approached rationally and analytically. A consolidation loan can help us to get extra cash that can be put off.