Post by nurnobisorker14 on Oct 30, 2024 10:35:09 GMT
Knowing how to combine several loans into one is useful for every bank borrower. The process of combining several credit products, which is officially called consolidation, has its strengths and weaknesses. As well as important differences from "regular" refinancing.
Contents hide
1) Credit consolidation - the main thing about the service
1.1) Refinancing and consolidation - differences
2) Advantages and disadvantages of unification
3) How to combine multiple loans into one - the process
4) Combining credit products is beneficial
5) Is it possible to consolidate loans - a brief summary
Loan consolidation - the main thing about the service
Consolidation means combining two or more debts to the bank(s), repaid on different dates and in different amounts, into one. A similar service is refinancing, but there is a difference between them.
Refinancing and consolidation - differences
Refinancing is obtaining a new loan to pay off an existing debt. The goals are to reduce the financial burden and the risk of default. Sometimes bank clients manage to refinance an existing debt at a comparatively lower interest rate.
Consolidation can be considered a special bulk email campaigns case of refinancing. The main thing about the difference between the services:
Most often, one debt is refinanced, for example, on a consumer loan, mortgage or car loan. Consolidation, as a rule, is subject to two or more credit products (including those issued in different financial institutions).
During consolidation, the creditor usually changes, while during refinancing, it generally remains the same (the same bank).
In the case of consolidation, funds are provided to combine several debts into one, and for no other purpose. Let's say organization A offers a client 50,000 rubles to close debts of 30,000 rubles and 20,000 rubles to banks B and C. In case of refinancing, under the same conditions, it can issue 60,000 rubles. 50,000 rubles will go toward paying off loans, 10,000 rubles - to the borrower's card balance.
If there is a benefit, the methods can be combined. For example, consolidate several debts in the first bank, and refinance this one common debt with another creditor.
Advantages and disadvantages of unification
It is recommended that clients of Russian banks combine loans and credits taking into account the following advantages:
It becomes possible to make one (not two or more) monthly payments. The risk of getting confused in dates and amounts automatically disappears. Those who pay their debts through branches and ATMs, rather than remotely, receive an additional advantage in the form of time savings.
If the new interest rate is lower than the previous ones, the total overpayment amount is reduced. You can also pay less for bank services (annual fees for cards, SMS notifications, insurance).
If desired, you can change the duration of the loan. Depending on your current solvency, the term can be extended to reduce monthly payments, or shortened to minimize overpayments on the interest rate.
Extending the loan period is beneficial to banking organizations. If you are not sure that the lender will approve your application for consolidation or refinancing, specify a longer term for repayment of the debt than before.
Disadvantages of the decision to consolidate several loans into one:
The need to draw up a new agreement. Accordingly, to re-collect a set of documents, wasting time and effort.
Risk of being rejected. Even the bank that is the original creditor can reject the request. Once again, we note that to reduce this risk, you need to increase the lending period.
Possibility of overpayment. The new interest rate may be comparatively higher than those already in effect for previous financial obligations.
Disadvantages you shouldn't worry about:
The need to find out the balance of current debts, transfer money to bank accounts. Today, all such operations are performed remotely. You can find out the amounts of debts on the current date, for example, in mobile Internet banking services or through the Personal Account of browser applications (do not require downloading). Here you can also make payments - with instant credits and without commissions.
Refusal of early repayment of debts from current creditors. Russian legislation prohibits banks, microfinance organizations and other credit institutions from refusing clients early repayment or providing for penalties for it (except for the first weeks, sometimes months after signing the contract). In case of violation, you can file a complaint with the Central Bank.
Please note: consolidation is not the only way to combine debts. Another available option is to take out a consumer loan for an amount equal to the existing debts.
Let's say you owe 35,000 rubles to two creditors. In this case, you can get a new loan for 70,000 rubles or more.
Contents hide
1) Credit consolidation - the main thing about the service
1.1) Refinancing and consolidation - differences
2) Advantages and disadvantages of unification
3) How to combine multiple loans into one - the process
4) Combining credit products is beneficial
5) Is it possible to consolidate loans - a brief summary
Loan consolidation - the main thing about the service
Consolidation means combining two or more debts to the bank(s), repaid on different dates and in different amounts, into one. A similar service is refinancing, but there is a difference between them.
Refinancing and consolidation - differences
Refinancing is obtaining a new loan to pay off an existing debt. The goals are to reduce the financial burden and the risk of default. Sometimes bank clients manage to refinance an existing debt at a comparatively lower interest rate.
Consolidation can be considered a special bulk email campaigns case of refinancing. The main thing about the difference between the services:
Most often, one debt is refinanced, for example, on a consumer loan, mortgage or car loan. Consolidation, as a rule, is subject to two or more credit products (including those issued in different financial institutions).
During consolidation, the creditor usually changes, while during refinancing, it generally remains the same (the same bank).
In the case of consolidation, funds are provided to combine several debts into one, and for no other purpose. Let's say organization A offers a client 50,000 rubles to close debts of 30,000 rubles and 20,000 rubles to banks B and C. In case of refinancing, under the same conditions, it can issue 60,000 rubles. 50,000 rubles will go toward paying off loans, 10,000 rubles - to the borrower's card balance.
If there is a benefit, the methods can be combined. For example, consolidate several debts in the first bank, and refinance this one common debt with another creditor.
Advantages and disadvantages of unification
It is recommended that clients of Russian banks combine loans and credits taking into account the following advantages:
It becomes possible to make one (not two or more) monthly payments. The risk of getting confused in dates and amounts automatically disappears. Those who pay their debts through branches and ATMs, rather than remotely, receive an additional advantage in the form of time savings.
If the new interest rate is lower than the previous ones, the total overpayment amount is reduced. You can also pay less for bank services (annual fees for cards, SMS notifications, insurance).
If desired, you can change the duration of the loan. Depending on your current solvency, the term can be extended to reduce monthly payments, or shortened to minimize overpayments on the interest rate.
Extending the loan period is beneficial to banking organizations. If you are not sure that the lender will approve your application for consolidation or refinancing, specify a longer term for repayment of the debt than before.
Disadvantages of the decision to consolidate several loans into one:
The need to draw up a new agreement. Accordingly, to re-collect a set of documents, wasting time and effort.
Risk of being rejected. Even the bank that is the original creditor can reject the request. Once again, we note that to reduce this risk, you need to increase the lending period.
Possibility of overpayment. The new interest rate may be comparatively higher than those already in effect for previous financial obligations.
Disadvantages you shouldn't worry about:
The need to find out the balance of current debts, transfer money to bank accounts. Today, all such operations are performed remotely. You can find out the amounts of debts on the current date, for example, in mobile Internet banking services or through the Personal Account of browser applications (do not require downloading). Here you can also make payments - with instant credits and without commissions.
Refusal of early repayment of debts from current creditors. Russian legislation prohibits banks, microfinance organizations and other credit institutions from refusing clients early repayment or providing for penalties for it (except for the first weeks, sometimes months after signing the contract). In case of violation, you can file a complaint with the Central Bank.
Please note: consolidation is not the only way to combine debts. Another available option is to take out a consumer loan for an amount equal to the existing debts.
Let's say you owe 35,000 rubles to two creditors. In this case, you can get a new loan for 70,000 rubles or more.