The concept of payday loan consolidation certainly some of us have come across in practice, others certainly know this term from hearing. Consolidation is targeted at people with over-indebtedness. Consolidation allows you to replace several loans with one. Thanks to it, instead of a few high installments, you can pay one at a lower rate. Let’s look at the consolidation loan a little closer.
How can you explain the term “consolidation”?
It is a type of loan intended for the repayment of other loans, provided that they are repaid on time; you can not allocate a consolidation loan to repay late loans. The rules of granting it are more favorable than other loans. The biggest advantage of a consolidation loan is the fact that after its granting, the installment which the borrower pays is much lower. Banks offering a consolidation loan allow you to pay off your debt on your personal account, cash loan, mortgage loan, car loan and even credit card and installment credit.
What are the types of consolidation?
At the moment, two types of consolidation loans are available in banks. The bank can provide us with:
- consolidation loan with a mortgage;
- consolidation without a mortgage.
When deciding on the first type of loan, we must be aware of the fact that it will be associated with the entry to the land and mortgage register of the real estate, i.e. with a mortgage. Hence its name. This loan may be granted for longer than the one without a mortgage. We will have more installments to repay, but they will be lower. Not all persons interested in a consolidation loan are property owners. These people can apply for consolidation without a mortgage. However, these persons will be granted a loan of a smaller amount and for a shorter period.
The main advantages of consolidation loan
Consolidation of loans is a chance to reduce the monthly installments. By paying a smaller installment for spending, we will have more money, so it will be easier to make money in installments in the home budget. A consolidation loan can help us regain financial liquidity.