As the number of credits grows in households, the redemption of credits is a way to lower expenses and save money.
According to the Yarbrough, the current demand for consumer credit is growing faster than in 2015, at an annual rate. The use of several types of loans is also one of the realities that characterize this evolution. With multiple loans, the cost of monthly installments becomes a charge for revenue. Doing credit consolidation is a way to get low monthly charges to pay back and save money.
Get help from loan consolidation companies
The purpose of loan consolidation (https://consolidationnow.com/) is to have one new loan from the consolidation of all previous payday loans.
If in consolidated loans, the home loan makes more than 60% of the total, the new credit will be requalified mortgage loan. Otherwise, it is the laws applicable to consumer credit that will be applied to the pooled credit.
You have 10 days to think about the proposal on the new credit that will be sent to you by mail. In case of disagreement, you have 14 days after commitment to withdraw.
How does consolidation affect your debt?
The first consequence of a grouping of credits is the extension of the loan term. Even with a reduced interest rate. This induces the overall increase in the cost of the new loan. It should be ensured that your debt level after this credit buyback operation does not exceed 33% of your income.
There are other loan consolidation proposals with monthly payments that are higher or equal to those previously made to reduce the duration of the new loan (rare cases). These proposals may be suitable for the borrower when his situation improves and his contract provides for a reassessment of his monthly payment.
Law No. 2010-737 on the credit reform of July 1, 2010, requires your lender to inform you about the implications of the new credit for:
- the extension of the duration of the new credit
- the increase in the overall cost of the loan
- the increase in the duration and overall cost of credit
How to use a credit pool?
If the charge on your loans is too high for your earnings, contact several specialized financial institutions, inform them about the credits to be consolidated (insurance, credits, contracts …) then compare. The lender will first make sure of your means of repayment. For this, you will be asked for amortization tables or contracts for old credits.
Remember to check if the financial institution that agrees to consolidate your credits has paid off the debts of your various loans. You must request and receive a refund certificate. If prior debts are repaid, request release (release) of the collateral that covered these loans.
To find out if the grouping offer you are offering is more favorable
- first, calculate the interest remaining to be repaid
Take the amount of the maturity on each depreciation schedule (repeat the transaction for each loan) and multiply it by the number of months remaining before the term of the loan. Then deduct the remaining capital that you have to pay right now.
- In a second step, do the calculation of the grouping operation
Multiply the proposed maturity by the number of months of the pooled loan. Then draw the loaned capital and add the file fees to have the cost of the new credit
Make a comparison to see if the cost of consolidation is lower than that of old credits.
It should be noted that grouping at a lower cost is rare. In most cases, the goal of credit consolidation is to reduce the cost of monthly payments by increasing the duration and thus the cost of the loan.