Thanks to the consolidation of loans, we pay one lower installment instead of several others, we do not have to remember about the dates of many installments, and we also have the option of obtaining additional cash. See http://saltwaterconnections.org for a write-up
The offer of consolidation loans has been on the Polish market for over a dozen years, in two forms:
– mortgage collateral – in this case, one of the consolidated loans is a housing loan, – a consolidation loan – cash.
Some of the offers currently available on the market enable repayment of loans without having to pay another commission, which means that we have a chance of getting a lower installment. How can our installments be lower? There are two solutions:
– thanks to the extension of the loan period, which makes the installments lower, but the overall cost of credit higher,
– thanks to the use of a lower interest rate than in the case of existing liabilities. This possibility arises because at the moment of loan consolidation, we become a “safer” client for the bank, meaning those who are better at maturing debt repayment in a timely manner.
When is it worth consolidating loans?
Many people fall into the so-called debt spirals, which consist in repaying one loan, the other, incurring more loans for repayment of loan installments, interest payments, and then we can already say that we have a very serious problem. Often, however, in this situation we stand against the wall and we have no other choice. We are threatened with confiscation of property, and this is a very bad situation. In this situation, consider whether it is worth to sell something rather than let the bank take our property from us. If you sell yourself, we’ll definitely do better. A consolidation loan is a better option than the use of so-called non – bank loans without Retrodatabase, type of payday loans, etc. However, not always. It may turn out that we will pay equally for a consolidation loan as for a non-bank loan. At the same time, non-bank loan agreements, as the name suggests, are granted by companies that are not banks and are not subject to appropriate regulations. Of course, there is the so-called anti-usury law , but despite that agreements in such companies are often very complex and contain numerous hooks that may be disastrous for us. Of course, not all non-banking loan companies use such treatments, but you have to be very careful. In addition, such a company also has to compensate for the risk associated with the borrower’s failure to pay, and he does so through the high costs of such a loan, which is charged to the client.
In what situation is not worth using a consolidation loan?
In my humble opinion, it is not worth using consolidation loans in a situation where we are able to pay our debts, but we want life to be a bit easier and we prefer to reduce the installments and spread credit obligations over time. We will simply pay more in total. It is better to tighten the belt for some time, but this is only my opinion, and everyone in this aspect may of course have different preferences.
Is consolidation profitable?
Summing up, it should be stated that in the situation when we are looking for an effective way to reduce our credit obligations, it is worth considering the possibility of consolidating our loans. Thanks to this, we will be able to repay them easily and take a step towards financial freedom. However, it is best to avoid a situation in which we are unable to pay debts and take loans only when it is necessary. A loan is a good source of investment financing, not consumption.