Credit consolidation and centralization of debts: principle and advantages
Using a loan is a quick financing option when the budget required to carry out a project is high. Taking out several different loans can lead to over-indebtedness when your financial situation deteriorates. Credit consolidation makes it possible to centralize your debts and to clean up your charges.
An interesting solution to centralize debts
The operation of credit consolidation is relatively simple. A person who has several outstanding loans will take out a new loan to settle the amounts owed on each of them. This credit will be the subject of a single contract, with a single maturity and monthly payment. It can cover all of your consumer loans, miscellaneous debts and mortgages. Credit consolidation and centralization of debts generally involve extending the repayment period. It is recommended when you have difficulty repaying your debts, following a change in your life such as loss of income, divorce or illness.
The Benefits of Credit Consolidation
Concretely, paying a single monthly payment considerably reduces your expenses. Credit restructuring simplifies the management of your loans and allows you to better control your expenses. The amount of the monthly payments is recalculated according to your debt capacity at the time of the subscription to the credit consolidation. This helps rebalance your finances. Depending on the profile of the borrower and the new capital to be repaid, it is possible to set aside a certain budget which can be allocated to a new project. Keep in mind that this type of transaction involves extending the repayment period. However, you will have a clearer vision of your loan by dealing with a single contact.
Centralize debts thanks to credit refinancing
The interest rates and the conditions for obtaining a credit consolidation vary according to the lender. It is therefore essential to simulate the operation to have an estimate of the monthly payments and the new deadline before signing. The simulators take into account in particular your sources of income, debts to centralize to offer you the offers corresponding to your profile. It is generally advisable to seek the assistance of a broker to be sure of finding a contract suited to your situation. Acting as a trusted third party, he will present you with the possible options and indicate the various costs associated with the transaction. Combined, brokerage, handling, release and other fees weigh heavily. They can however be integrated into the loan group.