Ideas for better use of credit cards
admin / May 12, 2022
If you have many installments to pay and would like to replace the various payments with a single total debt, the debt consolidation loan is right for you.
If then, in addition to wanting to summarize all the installments in a single payment, you also wish to obtain new liquidity with which to be able to satisfy further needs that may have arisen, then you certainly cannot deprive yourself of investigating how it works and what the requirements of a debt consolidation loan are.
So let’s try to take this opportunity to take stock of debt consolidation financing, and find out everything you absolutely need to know before making your request!
It is a personal loan which aims to “take over” from various other loans in the process of repayment.
In other words, the most important feature is that of being able to consolidate multiple outstanding debts into a single loan and, if you wish, obtain additional liquidity with which you can support new more or less unexpected expenses.
Naturally, given the delicacy of the operation (the bank will replace other creditors, concentrating all the risks within itself), the preliminary investigation is generally more complex, and the greater the documentation that will be required of you.
Think, in this regard, of the need to deliver to the “incoming” credit institution the extinguishing accounts of the loans you want to terminate, or those documents that declare how much you have to pay in order to be able to extinguish the old debts.
A very frequent question that our users ask us is: should we proceed with this type of financing?
The answer is not easy to be able to elaborate in such a general way, and for this very moment we advise you to get in touch with us and study your case individually.
In principle, however, we can underline how debt consolidation can be useful in order to simplify the management of your finances, also allowing you to be able to lower the amount of monthly payments that you will have to pay, especially if you aim for an extension of the repayment period of the debt.
It is also a decent opportunity to have additional liquidity: just be careful not to go overboard, as the risk of over-indebtedness is quite large.
Usually the granting takes place in the same manner that governs any personal loan and, therefore, should not require you to provide collateral (such as a pledge or a mortgage).
In any case, it may very well happen that in some cases the bank / finance company may ask you to present a real guarantee, or adopt the loan repaid at home, or even ask you for the signature of a co-obligor or a third guarantor, who guarantees the success of the operation.
Bear in mind that the request for a guarantor is quite common, and therefore do not be surprised that – especially in particular conditions (such as, for example, it could happen if you do not have a particularly stable employment relationship or if you have had some minor payment problems with past loans) – the bank will request similar support from you.
Debt consolidation loan agreement
In order to carefully evaluate the convenience of the operation, it is advisable to analyze – possibly with an expert – the loan agreement, which will include various elements which you will have to take into consideration.
Among the main ones, we highlight:
any guarantees required: we talked about it in the dedicated paragraph;
But what if you can’t, can’t or forget to pay a debt consolidation installment?
The consequences are not particularly pleasant and, precisely for this reason, in this situation we advise you to contact your credit institution immediately.
The effects of non-payment of the installment are in fact not only those of the increase in interest (with the application of a default), but also the risk that one’s name is included in the list of late payers and/or reported to the protection bodies of the credit such as the credit bureaus, making it much more difficult for you to get new loans.
Furthermore, failure to pay even a single installment gives the credit institution the green light to be able to unilaterally terminate the contract, charging you for all subsequent expenses.
Finally, we remind you that, like any other form of loan, this too will allow you to pay off the loan earlier than the agreed term.