You took a few payday loans and you can’t deal with paying them back? The solution to this problem may be reaching for a consolidation loan. Thanks to consolidation, you will spread your repayment on convenient, low installments and will relieve your home budget. In the article we will check what consolidation is in practice. We will also tell you where to get a consolidation loan to pay payday loans and what are its most important advantages.
There is no denying that financial decisions taken by Poles are not always well thought out. The consequence of such actions is often excessive debt and problems with timely repayment of liabilities. If you live “from first to first”, your budget is very tight, and to pay off installments of loans and credits, you often give up important expenses – it is worth reaching for an effective lifebuoy. Lifebuoy in the form of a consolidation loan.
What is a consolidation loan?
A consolidation loan is a loan intended for the repayment of loans, credits and even debt on debit or credit cards. You will successfully consolidate consumer, car, mortgage, bank and non-bank loans.
When taking a consolidation loan, instead of several loan installments you will pay one – lower. Thanks to this, you will significantly reduce your home budget and breathe a sigh of relief. Unplanned costs will no longer be a source of financial disaster, and high loan installments will not stand in the way of financing other, equally important expenses.
When to reach for a consolidation loan?
The right moment to reach for a consolidation loan is when you are able to repay your liabilities on time. Delays in repayment (especially those lasting longer than 60 days) may result in a deterioration of your credit history at the Credit Information Bureau. Low scoring in BIK may be the reason for a negative credit decision, effectively crossing out dreams of financial freedom.
Lower installment – longer loan period
Before you reach for consolidation, you must know that the reduction in the monthly installment amount is due to the extension of the loan period. And this can mean a slight increase in the total cost of the loan. There is no doubt, however, that in exchange for financial security and restful sleep, it is worth to opt for such a solution.
Where to get a consolidation loan?
The institutions authorized to grant consolidation loans are banks. Although not all of them allow the consolidation of debt from payday loans, there are those that will grant credit to the clients of loan companies.
However, before you reach for a consolidation loan, remember that banks apply very restrictive creditworthiness testing. In addition to checking your history in the Credit Information Bureau, they will also verify that your data is not in the debtors’ registers. They will ask you to complete a long loan application, provide certificates from your workplace, bank statements and documents confirming your debt at other financial institutions.
Even a small scratch on the image of the future borrower may result in a negative decision. Does this cancel the chances of getting funding? Fortunately not. An alternative to a bank consolidation loan may be to take out an installment non-bank loan.
An installment non-bank loan for repayment of payday loans
Although loan institutions do not grant loans for consolidation purposes, you can use a standard installment plan to pay off your debts. Non-bank lenders grant loans for any purpose. Depending on the company, their maximum amounts range from several to several tens of thousands of USD. The repayment period is from several to several dozen months. The funds raised can be used not only for unexpected expenses or realization of dreams, but also for the repayment of current financial obligations, e.g. payday loans.
A huge advantage of a non-bank loan is the simplified procedure for testing creditworthiness and the minimum amount of formalities needed to receive money. By using the services of non-bank institutions, you can borrow money for proof, without having to provide a stack of certificates and documents. You will receive a decision even a few minutes after sending the loan application. If it is positive, the money can be in your account within a quarter of an hour.
Importantly, an additional person with a negative credit history at the Credit Information Bureau may also receive additional funds. Although most companies look into BIK resources, low scoring does not automatically mean a negative decision. A non-bank installment loan will therefore prove to be an invaluable support for people who bear the consequences of reckless financial decisions made in the past.
Although the cost of a non-bank loan may be slightly higher than the cost of a consolidation loan, a greater chance of a positive decision, express transfer and a minimum of formalities effectively compensate for the increased fees.
Debt consolidation – what else is worth knowing?
If you want to take a consolidation loan, be sure to check how you can pay your current financial obligations. If the early repayment of loans or credits involves the necessity of paying high commissions, reaching for consolidation may prove extremely economically unattractive. This applies especially to banking products. Early repayment of payday loans does not require any payments.
The consolidation of loans and credits is especially recommended to people who are only a few steps away from the debt loop. However, remember that if you approach your own finances irresponsibly, a consolidation loan will be of little use. Sooner or later you will stop paying off this commitment as well. The equivalent step should therefore be to develop healthy, positive financial habits and to learn how to manage your own budget.
Measure your strength
Before you reach for a consolidation loan, make sure you manage to pay the installments on schedule. Untimely repayment of liabilities may have extremely unpleasant consequences and may result in deterioration of your financial situation.
If you do not return the money on time, both the bank and the loan company will start a recovery procedure aimed at enforcing the payment. The consequence of indebtedness may also be the transfer of a case to an external debt collection company or directing it to court and enforcement proceedings.