What is a consolidation loan and how is it different from an ordinary bank loan or a loan company? Well, the consolidation loan, as the name suggests, consolidates. More specifically, it consolidates previous commitments. So if we have several loans in various loan companies and we pay several installments a month, it is worth taking a consolidation loan. We can combine all these installments into one, reduced one. And at the same time additionally, choose additional cash.
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The amounts of such loans are usually high. Because in order for the remaining credit and loans to be consolidated, it is first necessary to repay them by the new lender. Summation of the entire amount that has been repaid and calculation of this monthly installment. It is quite a comfortable matter, because if we have some delays in several companies, payday loans will be repaid thanks to the consolidation loan. And we will be able to start paying off again without delay. When it comes to consolidating payday loans, good credit history at BIK and permanent employment are usually required. The amounts of loans of this type are different, they smell from several to several tens of thousands. You can apply for a consolidation loan up to PLN 25,000 for 12 months, without verification at BIK.
Is the consolidation of payday loans a good idea?
Loans outside the bank over the Internet, granted for a short period of time have it to themselves that the repayment date is very short, and extending it very expensive. So if we have several such loans and limited cash resources, it is not difficult not to make up for the payday on time. In addition to the costs of prolonging the repayment time, the next high fees are the costs for late repayment. So if our home budget is “close”, it is worth considering the possibility of consolidating all payday loans and spreading them into installments, which will make it easier to pay monthly installments and ensure that we have enough money each month.
Consolidation loans may also be useful in another case. In the case when a person who borrows money from various loan companies, and very often uses fast payday services online, it is very easy to fall into the so-called debt loop. Perhaps, dear reader, if you did not have such experiences behind you, you probably do not know how easy it is to get involved in this difficult situation. It sometimes goes up to several years, and it rarely ends with a debt collector and acquisitions of assets, often accumulated throughout life.
How is this process going?
All you have to do is make 2,000 zlotys, 1,400 zlotys you spend per flat, and 600 zlotys for food. If you do not have any savings or so-called “safety buffer”, then one small stumble is enough to disturb your financial liquidity. In the case of dismissal, you need about a month to find another source of income. There is nothing else to lend PLN 2,000 that you would normally earn a full-time job. But let’s assume that the job you have found is not good for you, or the boss had other expectations, and you are fired. Not enough, therefore, that you have to repay the previous payment, increased by interest, then you have to borrow the second enough to survive the next month. So you take out the next loan, pay it back the first hour. Thus, the liability is already several nice thousands of zlotys, increased by interest. The situation is not so tragic when you have chosen to repay the loan in monthly installments.
If you have been online for a short period of time, you must pay off your entire commitment within a month. So what can you do in this situation? Very often people who do not have adequate experience and knowledge in the field of personal finance management repeat the process several times. The repayment loan is growing at an astronomical pace. Finally, due to the size of our commitment, companies providing payday loans and installment loans, refuse to continue financing.
What to do in that case?
For some people, this is an out of office situation and the first delays in repayment begin. They stop answering calls from the loan company, and the case is referred toin the first stage to debt collection and then to the court. In such cases, the court rules the sentence very quickly. Usually, in addition to the court costs, the bailiff is assigned a bailiff who will also collect his commission from the debtor’s amount. It is usually around 5%.
Thus, in a simple way, from one innocent moment, you can make yourself a debt of several dozen or even several hundred zlotys. In the case of such large sums and living for a salary not much higher than the lowest domestic rate, debt repayment can take up to several years. These will be the years that we will have to survive for half the current salary, because that’s how usually the bailiff gets.
If we want to avoid the unpleasant situation described above, if we notice that our financial situation is getting out of control, it is worth reaching for a consolidation loan as soon as possible. Thanks to this, we will be able to pay off the entire debt to existing lenders and get a much lower installment, spread to our capabilities. This will allow you to pay back the loan steadily and without delays, and it depends on the client and the company that provides consolidation loans.
Is consolidating payday loans always the best way out?
Is it always worth consolidating loans into one whole? Can it sometimes be better to pay back each one a little? The answer to this question depends on the situation of the lender, because each situation is usually different, so the answer should also be different. Generally speaking, if we manage to repay even several loans or credits, consolidation will not be necessary. It is obvious that the company that consolidates them will charge its fees for it. A strong argument for, however, is the possibility of choosing an additional amount, without incurring further obligations. All loans will be combined into one installment, and we will pay it back to one lender. In addition, we can also lower the amount of monthly liabilities by extending them for a longer period. This may be a good choice if we expect a reduction in our revenues in the near future.
In our opinion, it is worth considering the consolidation very seriously, if we have problems with the repayment of liabilities in several companies at the same time. This can lead to the situation we described above. At some point, the liability amount may reach a level where the loan will be too high a risk for the lender, so he will have to make a negative decision. It is not worth waiting until this moment, because then also the application for a consolidation loan may be rejected. The decision will take you to the state, and we do not want to advise someone badly. We must certainly bear in mind that if we do not have problems with repayment of existing obligations, perhaps additional cash is unnecessary, especially since it carries additional costs. If, however, our financial situation is not so good, and we have to pay back one more time, then it is worth considering it. It is certain that interest for late repayment and bailiff commission is higher than the cost of consolidating payday debts.