Credit consolidation: instructions for use
The consolidation of credits was previously called ” credit repurchase “. Credit restructuring and credit consolidation are also terms that can be used to designate credit consolidation. Clarification at sbs-internetsolutions.com
The grouping of credits was created in the course of the 1980s. It mainly concerns people or households in a situation of over-indebtedness. It consists in closing the various credits in progress by paying off their capital and then replacing them with a single credit, with different lower monthly payments, payable over a longer period. The purpose of grouping credits? Stop the downward spiral of over-indebtedness.
Two kinds of credit grouping should be distinguished:
- The grouping of consumer credits : the grouping of consumer credits, as its name suggests, brings together all your consumer credits, namely car loan, personal loan, work loan, holiday credit, study credit, etc.
- The grouping of home loans : the explanation is in the title, namely that the grouping of home loans only relates to home loans.
The advantages of credit consolidation
Now let’s take a look at the advantages of credit consolidation :
- Lower monthly payments : the main advantage of grouping credits is to see your monthly payments melt like snow in the sun. Since the total amount owed is spread over a longer period of time, your monthly payments are logically reduced.
- A single due date : you no longer have to pay your car loan every 15th of the month, your work loan 10 days earlier and your holiday loan on the 2nd. With the grouping of credits, since you no longer hold anything but a single debt, so you only have to worry about one single due date.
- A single contact : in the same vein, you will also only deal with one contact.
- Serene management : a single due date, a single contact, this should relatively simplify your task. No more drowning in bills!
- Stop the spiral of over-indebtedness : thanks to lower monthly payments, you are free to live more comfortably, without the risk of having to take out new loans to pay the old ones. Say stop to the overindebtedness spiral.
- Increase in purchasing power : once again, thanks to these reduced monthly payments, you can finally take advantage of your hard-earned money rather than spending your entire salary paying down your debts.
- Cash that finds a smile : the grouping of credits is also an opportunity to have more liquidity. What potentially be able to start saving again!
New goals in perspective
Whatever loans you have taken out, thanks to this new organization made possible by the consolidation of credits, your accounts will once again be in balance. If the grouping of credits not only allows households in over-indebtedness to get their heads out of the water, it also allows them to consider certain objectives, formerly considered unattainable.
The guide to credit consolidation
If you have taken out too many loans, your debt ratio may be too high. In other words, that your income is no longer enough to pay your debts. You can then opt for a grouping of credits, regardless of the nature of your different credits.
Consumers who turn to credit consolidation are not necessarily compulsive buyers. One day or another, we can all face a fall in income that no longer allows us to honor our various debts. As you may know, lenders and other banks do not tolerate late payments. In this type of specific case, grouping credits is therefore an attractive option.
How credit centralization works
After having taken out a car loan, a mortgage loan, a study loan, or even also a vacation loan, you find yourself caught in the throat by your multiple debts, debts that you are unable to repay in relation to your income? By combining these different credits into a single loan, you offer yourself the possibility of reducing your monthly payments, while paying over a longer period than initially planned. Your charges are therefore lengthened and you find the possibility of living decently.
The grouping of credits or repurchase of credits therefore consists of an alternative aimed at reducing your charges, limiting the accumulation of interest, while eliminating the problem of over-indebtedness.
The benefits of the process
Realizing a grouping of credits is a relatively simple process. The process offers a single credit, a single contact for a single and fixed monthly payment, known in advance. The amount of your monthly repayments will also be adapted to your income. In reality, the monthly payment will be calculated according to your ability to repay.
It is now the single point of contact that will take care of credit payments to former lenders when you only have one debt to pay.
Please note: despite lower monthly payments and a more favorable rate, the total cost of the new loan may prove more expensive.