The merger of loan consolidation, debt consolidation, credit consolidation tends to be more and more frequent. But what is that consolidation and who is it worth?
Simply put, it means consolidating the merger of several loans into one. This is most common with overdrafts, credit card loans and consumer loans. It may come in handy if you have taken several loans and you are not able to repay them. Their primary reason is to reduce monthly repayments and make payments more transparent.
This makes it easy to relieve the family budget, the repayment period can be reduced by consolidation due to lower interest rates, or even drawing on a loan in a higher amount than the existing loans.
Do you ask when it pays for consolidation to think?
- When the repayments of existing loans are so high that they limit your basic human needs and costs. So if you do not have housing, food and medication.
- When the amount of the payments actually paid will be lower for the new loan than for the existing ones. This case is in fact not as frequent as it may seem. That’s why you’ll always have a thorough understanding of the terms of the new loan
- When a reduced installment allows you to defer part of the money to unexpected expenses you would otherwise have to be forced to deal with another loan. This is a very good and important step, but do not forget that you will certainly not appreciate the reserve so as to cover interest payments on loans. Therefore, it is appropriate to create only the basic reserve (four to six monthly household expenses) and the rest of the money to repay the debt.
You still do not know why you should opt for consolidation?
- Possibility to merge bank, installment loans, credit cards and overdraft.
- Reduction of interest rates and monthly repayments
- Possibility to set flexible payback times
- Communication with only one creditor (negotiation is easier)
- You pay only one debt to make it easier to administer
- The possibility of drawing a loan above the refinanced amount