Debt Consolidation Loans
A debt consolidation loan is a bank service that allows you to combine all existing debts and pay the total amount in one Delaware bank.
When is it needed?
Let’s say you decide to get some goodies – like a huge TV, an Italian kitchen set, and a nice new car. At the same time, your wife really liked the coat, and the child graduated from school, entered the university, and now you need to pay for his/her education. You do not have a credit card, so you took out express loans, and it turned out that they were all in different banks. Now you have to go to the branches of different banks every month in order to pay off your monthly debt. In this case, you need not to get confused in papers and dates, pay the required amount in each bank. Having loans in five different banks is not very convenient. It is much easier to have one loan at the bank, which is located a minute’s walk from your home or office.
Debt consolidation – how to do it?
For your convenience, banks have come up with a consolidation procedure that allows you to combine all debts in one bank and pay one (total) monthly payment in a bank branch that is convenient for you.
It is no longer a secret for anyone that banks interact with each other, selling debts to each other. So the bank of your choice can buy your loans from others and combine everything into one.
In order to use this service, you just need to come to the branch of the chosen bank and write a corresponding statement about the desire to create a debt consolidation loan.
Of course, such a service has a price because someone will have to work hard to implement it, and therefore the total loan amount may slightly increase. However, in practice, you will rather find yourself in the black: you would still have to spend money because for trips to different branches you would need to pay for gasoline, and you would also lose precious time. As you know, time is money.
So, as you can understand, a small surcharge to the bank can significantly relieve your head – you no longer have to deal with calculations and drawing up a plan for paying off debts for a month. Now you will go exactly once every four weeks to the nearest bank branch and pay all your loans at one time. It is much more convenient and faster.
Another item of expenses that can be decisive for refusing a consolidation loan is the summation and recalculation of the risks that must be compensated. As a result, the bank may ask for collateral or increase the loan amount. If you already have collateralized loans, the collateral will apply to the entire amount.
However, on the other hand, a correctly chosen bank will allow you to save on other expense items of the loan agreement, which imply large interest surcharges. Therefore, in the end, most of your additional costs will again be compensated.
Debt consolidation loans have recently been in increasing demand, but before agreeing to such an offer, you should sit down and think seriously – weigh the pros and cons, calculate the risks.
A consolidation loan is one of those banking services which can significantly simplify your life. However, there are many pitfalls that you need to know about in advance, and therefore you need to treat this opportunity “wisely”.
Advantages and disadvantages of combining loans
- You reduce the monthly loan payment by refinancing and reducing the interest rate;
- You remove the encumbrance from a car that was bought on credit and is pledged by the bank;
- You get additional funds without applying for a new loan;
- It’s convenient to pay monthly loan payments.
- You spend additional time collecting loan documents and drawing up a new agreement;
- You must prove your solvency to the bank that provides you with the consolidation loan;
- As a rule, you need to have a good credit history.