For each borrower there is a solution in the form of consolidation of loans, which allows you to combine several repaid liabilities into one, legible obligation with only one installment instead of several to different institutions. However, as in the case of taking out a regular loan, the bank submits the client to a thorough examination of its creditworthiness.
What loans can you consolidate?
Until recently, only debts could be consolidated, which are repaid in banks, because it is banks that offer consolidation of loans. For this reason, loans from parabanks or preferential loans were not subject to consolidation. Currently, the situation looks like that we can try to consolidate loans and loans, and even payday loans.
However, all borrower’s liabilities are taken into account to assess creditworthiness. Meanwhile, a consolidation loan usually concerns debts held in a bank other than the one in which consolidation is carried out. In addition, banks may set the maximum amount for which they grant a consolidation loan (eg in Meteor Bank up to PLN 200,000). In addition, banks may indicate the maximum time for which they can spread the installment to the client (given in months).
What benefits does a consolidation loan bring?
A consolidation loan is granted to repay existing liabilities such as:
- cash loans,
- car loans,
- housing loans whether
- installment loans,
- short-term loans,
Thanks to this solution, it is even possible to close the overdraft on the account or to cover the limit on the credit card. These liabilities are repaid by the new bank under one loan with one installment. It is a convenient solution for people with many paid liabilities. Of course, it may happen that the installment of the consolidation loan will be lower than the sum of installments of previous liabilities. Meanwhile, the bank offering a consolidation loan offers an extended financing period, which increases the total cost of the loan, but is an ideal solution for people who have problems with their financial liquidity.
What to look for when deciding on a consolidation loan?
When comparing the offers of consolidation loans available on the market, it is worth paying attention to several elements. First of all, the amount of the installment after consolidation is important (preferably lower than the sum of the existing charges). Then pay attention to the total amount to be repaid (the bank may require an additional commission, which will not be included in the monthly installment). Another important factor is the repayment period after consolidation (there may be a lower monthly installment amount, but a higher total amount to be repaid). The APY (Actual Annual Rate of Interest) or the required collateral are also valid.