Repayment of several or several obligations to each borrower is not a small challenge. After all, our wallet is not made of rubber, and delays in loan repayment may have unpleasant consequences for us. To avoid this, a consolidation loan is a good solution. It is characterized by a large number of pros, but also such a good solution did not avoid a few cons. I invite you to read the article.
Who pays for a debt consolidation loan?
At the outset, we must explain what a consolidation loan really is. As the name suggests, it is a loan that combines, in other words, consolidates all our existing financial liabilities. Regardless of whether these are bank loans, loans, payday loans or private loans (because this may also be the case). In this way, when we consolidate, we receive funds that the bank transfers to individual accounts of our creditors, and we receive a new, one installment to be repaid each month. This is generally a positive tactic situation, because we must be aware that having many obligations means having to pay many installments.
A large number of installments really generate unnecessary costs in the form of: double interest rate, insurance, commissions, margins and other mark-ups. When taking a consolidation loan we have only one liability and one loan. Of course, nothing is for free. While a single loan installment will be lower for us than the sum of all installments of existing liabilities, our total repayment amount will be higher. This is because with a lower installment, the repayment time is longer, which in turn affects the overall cost of the loan.
Additional amount to consolidation loan, take it or not take it?
I know from practice that when a person applies for a consolidation loan, a consultant often offers an additional amount of cash. So the “cut” sum of the loan, which we can be used for any purpose of our choice. It is worth considering whether it is profitable for us and whether we really need this amount.
After all, we take a consolidation loan in order to get out of debt, not to get into even bigger debts. However, if you need extra cash for some urgent expenses, it’s worth considering a loan advisor’s proposal. However, keep in mind that the consolidation loan installment will be higher. To sum up, as I mentioned at the beginning, the consolidation loan has its pros and cons that are worth remembering.