The most complicated and useful solutions currently available in the loan market may undoubtedly include so-called consolidation loans. Although this type of loan can be particularly useful for many consumers, statistical data clearly demonstrates that only a small percentage of Poles can explain the mechanism of the consolidation loan and why, in some situations, this solution is particularly recommended. Let’s take a closer look at this problem and try to answer the most frequently asked questions.
What is a consolidation loan?
As the name implies, the main task of consolidation loans is “consolidation”, which is a combination of several different loan commitments. In practice, this means that several different loans taken by the consumer are combined into a large loan. Often, the option of choosing cash is associated with obtaining a consolidation loan, which, of course, depends largely on the creditworthiness of the borrower.
While the option of taking a consolidation loan, that is, the consolidation of several different loan commitments, was not offered by all banks operating in the Polish market some time ago, such solutions are now standard. In addition, consolidation loans are also available in the offer of non-bank companies in increasingly attractive financial terms.
What are the key benefits of consolidation loans?
As mentioned, a consolidation loan involves combining several different consumer loan commitments into a single loan. This only has at least several significant advantages, for example, the fact that instead of several installments, the consumer pays one. In addition, loan periods are also combined into a loan duration, which allows the consumer to plan their financial future more conveniently. However, this is not all.
The consolidation of several different credit obligations in a single loan is a financially beneficial solution also for banks, thanks to which customers using such solutions can count on numerous additional amenities. We have already mentioned the possibility of “choosing” cash, that is, increasing the loan amount. In addition, the consolidation loan generally has benefits such as reduced interest rates and a longer repayment period. As a result, it may be that, for example, as a result of the merger of three different liabilities under a consolidation loan instead of three installments per month, we reimburse only once a month, the amount of which will be even several percent less than the sum of three fees reimbursed previously. The repayment period can also be extended (up to twenty percent).
In addition, as the financial situation of the consumer generally improves considerably as a result of taking a consolidation loan, a bank or a loan company considers it more credible, and this implies the availability of several additional facilities, such as the possibility of temporary suspension of the loan repayment or increasing the loan amount.
Because it’s worth it
Consolidation loans are often considered primarily an advanced tool for consumers trying to get out of the so-called spiral debt. This is true, but only in part. In fact, the idea of consolidation loans originally arose in response to the needs of consumers who were in a difficult situation when paying many different debts. However, taking advantage of the opportunities offered by the consolidation of loans is also advisable for those borrowers who do not have problems with the timely payment of their obligations. Lower interest rates, longer loan terms and less formalities: all these factors help improve your economic situation, which is always a change for the better, also for those consumers who do not have significant financial problems.