Payday loan consolidation companies could really help you
Repaying one commitment instead of a few, or even a dozen or so, means a great deal for both the borrower and the lender. Thanks to payday loan consolidation with one of the companies I prefer, we do not have to remember about the amounts and dates of individual receivables – we deal with one, specific sum that has to be paid on a particular day of each month. In this situation, it is much easier to plan your budget and maintain control over your finances.
Lowering the installment amount
As a result of the consolidation of loans, the sum we will have to settle each month will be lower. This type of solution may prove to be a good idea for people for whom repayment of existing debts constitutes too heavy a burden and which in the near future predict problems with their repayment.
Extending the repayment period
Consolidation of loans means a definite extension of the repayment period. Let’s also remember that incurring liability for more than 10 years will almost always mean a mortgage, and this involves not only the risk of losing property in the event of insolvency but also depriving us of the possibility of selling it. A longer repayment period also means a greater risk of losing financial liquidity and incurring consequences related to the inability to repay the loan.
Increase in interest
When dealing with lenders, remember that they provide loans in order to earn on them, so even the most favorable proposal will have a commission. In the case of consolidation loans, specific amounts depend on specific lenders, but usually, we will pay de facto 30-40% more for such “lowering of liabilities”. The extended repayment period, while reducing the monthly installment, allows for specific customer manipulation in the advertisements of a given product – their formula allows the presentation of benefits without providing real costs. We will find out only how much we will pay with the consolidation loan from the contractual provisions and reliable calculations.
It is worth noting that there are banks on the market that provide consolidation loans by charging a commission of 1-2%, which seems to be a fair price. The low-interest rate, however, mainly concerns relatively small sums and liabilities for a shorter period.
The total receivable grow not only as a result of an increase in interest rates – additional fees are also charged in connection with the valuation of a new loan, the involvement of a notary public and a loan with mortgage security – the cost of an entry in the mortgage.
Alternatives to a consolidation loan
It is true that a consolidation loan may be a way to avoid anticipated problems with repayment, however, the disadvantage is that there are solutions that are much more beneficial for the client. The borrower may, for example, apply for a grace period (the part of the capital installment is then suspended) or credit holidays (the entire liability is suspended). So long as we do not exhaust all available possibilities – a consolidation loan, due to the real increase in our costs, will not be profitable for us, even if the bank’s advertisement presents it differently.