Although in practice, in very rare cases credit is granted if the borrower already has some other debt, such situations are quite common in reality. The existence of multiple parallel credit obligations is first and foremost a moral and financial burden on the borrower because he has to remember several monthly loan payments at the same time, often confusing or even forgetting a payment, as well as overpaying the loan in interest payments that are different for each creditor. In order to deal with situations where a person has multiple loans, credit consolidation or credit pooling is often offered, also called debt restructuring.
Regardless of whether a number of credit commitments were made unconsciously or deliberately, it is advisable to address this situation to anyone with multiple debts through credit consolidation. The primary purpose of credit consolidation is to reduce the total amount of monthly payments to the borrower. The total cost of loans is not only the sum of their total but also the interest payments that are very high for non-bank lenders, so the existence of several non-bank loans is the most disadvantageous. By consolidating loans, the high-interest rates of each loan are combined into a single loan, which always has lower interest rates than each loan individually.
Credit consolidation is offered by both banks and some non-bank lenders. Credit consolidation means combining several short-term loans into one long-term loan, and the high-interest rates on short-term loans are also converted into lower interest rates. Consolidated long-term credit is usually a consumer loan or some other type of loan that has similar conditions and amounts that reach several thousand euros. Another option is to add short-term loans to an existing mortgage, with monthly interest rates generally ranging from 3% to 5%, which is clearly less and more profitable than short-term loans with monthly interest rates ranging from 10% to 20%. Of course, it is also possible to consolidate a number of large or long-term loans, combining them with an even larger loan, which also provides more favorable terms – a longer repayment term for smaller monthly interest payments.
How to get out of payday loans legally?
If you have received several payday loans and are unable to repay them or simply forget to make monthly extension fees, one way to get out of such payday loans is to go to this site and get a payday loan consolidation, this will make your life easier. But the most important thing is that you will be able to get lower interest payments, which will save you money in the long run.
Advantages of combining credits
The main advantage of combining credit, whether it is a quick loan or a consolidation of all your debts, is that you will no longer have to pay multiple loan payments and you will receive lower interest payments. People seeing merger bids usually only see these percentages at once and forget that making a single payment will be more profitable than making multiple payments, of course, if you don’t have automatic payments. Combining loans also allows you to get a longer repayment period and lower monthly payments, but this can lead to higher long-term costs, so be careful and account for what is more profitable!
It is important to mention that the consolidated loan is almost always more profitable than several individual loans, regardless of the maturity of the loan, but also in this case, the principle that the loan is repaid the less the total cost of the loan is saved in the long term.
It should be noted that in the case of credit consolidation, the winner is not only the borrower but also the lender, as it acquires both financial stability and unambiguous confidence from the borrower, as the borrower’s trust and commitment are no longer divided in several directions, but only in the direction of one particular creditor.