We often hear about debt loans, which are actually consolidation loans. Their purpose is to merge existing debts, thanks to which one – lower – installment is paid instead of several. Everyone has dreams they would like to realize. Unfortunately, sometimes the lack of adequate resources complicates everything.
Then, banks and loan companies often come to the rescue. This allows you to make your dreams come true, but also creates commitments that, if not paid in due time, can cause many problems. There are also those who take out a loan to pay back the previous one, and so the classic debt spiral begins.
Can you get out of it avoiding unpleasant consequences, e.g. in the form of bailiff execution? Yes! One of the many possible solutions is to consolidate all loans into one. So what should you choose the best debt loan? Advise!
What is consolidation?
Consolidation combines all liabilities into one. This repays one loan instead of several. It is worth noting here that the money from the consolidation loan is automatically transferred to the accounts of creditors who are in debt.
Very often it turns out that this type of operation in the form of consolidating all loans is very beneficial for the household budget. Why? Because the bank that grants you a consolidation loan will adjust the installment and spread it out over time , making it lower and repayable .
Remember, however, to avoid any arrears of payments under existing loans. Then the bank may refuse to consolidate. The basic condition for obtaining such a loan is a good credit history, without any arrears. For the creditor, it is information that you are a reliable borrower who repays all installments on time.
You can consolidate:
- cash loans,
- car loans,
- credit cards,
- current account debt.
For some loans, it is also possible to consolidate mortgage debt. Many banks even offer extra cash, e.g. up to 20% credit, which you can use for any purpose.
What to look for when choosing a consolidation loan?
Certainly on the APRC. This is the annual interest rate, i.e. the total cost of the loan borne by the borrower. In addition to interest, it also includes commissions, insurance and bank charges. All this is included in the monthly loan installment. Thanks to APRC you have the opportunity to compare the attractiveness of loans.
An important element when choosing a loan is also the amount of commission, insurance cost, and whether it is possible to choose the day of repayment of installments. This is a particularly important aspect, because thanks to the freedom in choosing the repayment day you will be able to adjust the repayment date so that it is set after receiving remuneration for work.
The next important step before choosing a consolidation loan is cost analysis. If the interest rate difference is less favorable for you, it may turn out that for a longer loan period (with lower installments ), the total cost may be slightly lower.
In addition to the installment amount, check also the total cost of the loan, which consists of:
- borrowed capital,
- sum of interest.
However, the highest financial freedom will ultimately be guaranteed by the attractive installment amount .
Which consolidation loan should you choose?
Before you decide on any loan , carefully study the offer of financial institutions. That is why it is very important to compare the offers of various banks to choose the one that will be most beneficial for you. Our credit comparison tool available on the website will help in this task. Thanks to it you will be able to compare loan rates , check the exact commission, APRC (loan cost) and how much the installment will ultimately amount to. Our loan comparator has appropriately selected offers that offer very favorable repayment terms.
Our ranking of consolidation loans will also help in choosing the perfect offer, in which we focused on all relevant parameters of the offers. In particular, their advantages and elements that should be noted before you make the decision to combine your obligations into one consolidation loan.