Who is the consolidation loan for
In recent years, a new product has appeared on the Polish banking market – the consolidation loan. As it turns out, he quickly gained his admirers and more and more people use this product, but is it really a solution for everyone and is consolidation profitable. Certainly, each of us has seen encouraging advertising slogans regarding consolidation and many of us are thinking about using this service. And all thanks to extremely encouraging slogans that say; Take a loan and enjoy lower monthly installments “” Combine all loans and pay less. ” Such slogans can actually be encouraging. So who can take advantage of such a loan and for whom will it be a profitable solution.
When should we be interested in consolidation?
In a situation where we have already taken out several loans, e.g. a home loan, car loan, cash loan or even a revolving loan, the multitude of monthly installments is beginning to overwhelm us and, first of all, we stop controlling their regular repayments, and at the same time the sum of monthly installments significantly exposes our home budget . And after a general summary, our total debt has already reached about PLN 100,000 and the sum of monthly installments is about PLN 1,700. For many of us, this is a very large amount and takes away a significant portion of our monthly income. Banks are happy to provide loans to their clients, but they are guided by the fact that the sum of monthly installments does not exceed 20% of their monthly income. Unfortunately, this limit can be exceeded in a very simple way, all you have to do is incur several installments in various banks. And in this way we fall into the so-called debt spiral and cease to control our debt. Unfortunately, such financial troubles are not convenient for any borrower, which is why we are starting to look for other solutions because the possible costs of debt collection, which is a last resort, are very high and also time consuming. Therefore, to help their clients overcome such a difficult situation, the banks came to meet them by proposing the possibility of consolidating their loans.
What is consolidation?
Consolidation is a loan that is granted to us to repay debts that we incurred in other banks. Its great advantage is the relatively low interest rate compared to traditional consumer loans, while their disadvantage is collateral which can even be a flat with the so-called mortgage, which can sometimes be really risky and unprofitable.