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Consolidation loan – Advantages of consolidation loans

 

Why is it worth consolidating debts? The combination of several financial liabilities contracted into one is called debt consolidation. Which is distinguished by the extension of the repayment period, one installment and the unification of the interest rate. A consolidation loan is a banking product targeted at people who want to regulate their finances and regain financial liquidity. Read the advantages and disadvantages of consolidation… 

Advantages of consolidation loans

The goal, which is also an advantage, is to reduce the monthly costs associated with the repayment of credit obligations. These include all kinds of cash loans, consumer loans, mortgages, as well as credit cards and debits. For the vast majority of clients, the first advantage is to reduce the monthly liability by extending the repayment period of the entire amount requested. More money is automatically saved in the portfolio of the person concerned, and thus financial liquidity is regained. An important advantage is a fact that debt consolidation usually results in the release of creditworthiness, which allows you to incur additional credit – but beware, this is a solution that somehow increases our debt. A convenient date for repayment of a consolidation loan is another advantage, which is worth paying attention to. Considering this solution, the borrower has the option to set a maturity date which will coincide with the date of remuneration or other benefit received. Some banks also offer the option of choosing additional preferential options to help settle their monthly debts. These include the several-month grace period most frequently used for consolidation loans secured by a mortgage. The mentioned mortgage may act in favor of those interested in this banking product. It allows you to focus more loans in one product. Some banks also offer the option of choosing additional preferential options to help settle their monthly debts. These include the several-month grace period most frequently used for consolidation loans secured by a mortgage. The mentioned mortgage may act in favor of those interested in this banking product. It allows you to focus more loans in one product. Some banks also offer the option of choosing additional preferential options to help settle their monthly debts. These include the several-month grace period most frequently used for consolidation loans secured by a mortgage. The mentioned mortgage may act in favor of those interested in this banking product. It allows you to focus more loans in one product.

Disadvantages of consolidation loans

The lower installment has its second face, which is associated with increasing the value of debt. The principle here is that the longer the repayment of the obligation, the greater its costs. Often, a consolidation loan is associated with a commission of up to 2 percent. the value of debt. Consolidation is also associated with a higher interest rate. This applies to both unsecured loans and those secured by a mortgage. What’s more, mortgage consolidation is not synonymous with the offer we can get for mortgages, so it is more expensive. In the case of a loan not secured by real estate, its amount will not exceed the amount oscillating around PLN 70,000. It may turn out that the bank will not cover all debts with the product. A frequent requirement of banks is to have proper collateral (mortgage) of the loan. If you transfer to another mortgage bank and other obligations, remember that we will not receive an offer comparable to a traditional mortgage loan. Consolidation is associated with a higher margin, which is most often dependent on the estimated risk.