Nowadays, almost everyone may need extra money. Consumer loans, short-term loans, credit lines, and credit cards – all of these types of loans can help you cope with difficulties, finance your ideas and fulfill your dreams, but the borrowing experience is not always positive.
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There are different ways to combine loans, but in general, there are four situations where borrowers most often choose to combine or refinance active loans. We draw your attention to the fact that credit refinancing is possible with and without debt, but it is always better to combine loans in a timely manner without becoming a debtor.
1. Reassessment of your financial capabilities
While many lenders do not stop emphasizing the importance of responsible borrowing, sometimes borrowers overestimate their ability to repay the loan on time. This problem is particularly widespread among short term loan users. It seems that a loan of USD 50-100 can be repaid peacefully from the next salary, but other expenses, contingencies, and overall financial situations are not taken into account.
The credit has to be extended and its cost increases in geometric progression. In this case, credit consolidation is almost the only way to repay your debts. If you refinance your loans on time, you will avoid getting your name on the debtors’ register, as this will happen 60 days after the loan is overdue.
2. Decrease of solvency
Every loan is a relatively risky venture as borrowers cannot be 100% sure of future financial security. The degree of risk increases when using fast loans with flexible repayment terms.
In this case, even a slight decline in insolvency can lead to debt. Credit consolidation allows you to convert several short-term loans into one long-term loan that can be repaid over several months. It is worth taking advantage of this when the borrower suffers from an illness, salary cuts or job losses, the birth of a child or the need to help family members financially.
3. Getting a better deal
The consumer credit market in Latvia is quite active and from time to time new offers appear which may be friendlier than the initial loan. Many people are not even aware of the possibility of combining short-term loans when applying for fast loans.
It is our recommendation to every borrower to continue researching the credit market even after the loan is drawn up and the money is transferred. You may find that you have a good credit offer that allows you to repay your loan or loans more conveniently and more securely to your family budget.
4. Desire to optimize loan repayment
The borrower may have sufficient solvency, a sound financial situation and all prospects of paying the creditors on time, but sometimes the initial terms of the loan repayment are inconvenient and disadvantageous. Each loan has its own repayment term, each lender has its own bank, which depends on the speed of payment processing.
An additional handicap is the varying interest rates that may lead to a total overpayment of the loan exceeding 100% of the principal amount of the loans. How to deal with this situation? Applying for Credit Combination. It will allow you to set a single monthly payment date and a single interest rate, making credit repayment easier and faster.
Loan for a specific purpose
It is important to remember that credit consolidation is not simply a new loan that can be used to pay off existing debts as well as other expenditures. On the contrary, re-crediting is a special service whose sole purpose is to cover active debts.
Both the responsible creditors and the Buenas family emphasize that you should not apply for a new loan to cover old debts. Instead, they use credit consolidation, a modern, responsible and legal way to deal with the burden of loans.
We, the Buenas family team, recommend that you refinance your loans without waiting for debt to build up. The most convenient way to do this is through the services of non-bank lenders on the Internet. Here’s how the non-bank re-crediting is organized!
Internet loan consolidation – a new one-day loan
Currently, credit consolidation is available not only at banks but also at various non-bank lenders offering their services on the Internet. Although in some situations, the borrower’s personal presence is required to complete the re-credit agreement, the application for credit consolidation and communication with the lender are usually done electronically.
To consolidate your existing loans, you need to take the following steps:
- Compare re-credit offers and choose creditor or creditors
- Fill out the re-credit application on the creditor’s website with all active credit information and personal details.
- expect a response from the lender and find out if it is ready to offer you a loan restructuring and under what conditions;
- I agree with the lender about the details of the agreement and confirm your consent to the credit combination.
- sign the credit agreement electronically, at the lender’s office, or receive the contract at the address via courier service.
After the contract is signed, the refinancing amount will be transferred to your bank account and you will be able to immediately repay the full amount of your active debt. After that, you will have one active long-term loan, which you can repay in small monthly installments.
Another way to refinance your loan online is to go to a credit broker. Brokers work with a variety of credit institutions and can help you reach out to credit institutions that the borrower himself was unaware of or did not intend to look at. When using a credit broker, pay attention to whether the broker is charging a commission for his services. For other loan consolidation costs, let’s talk about this in the article below!
How much does credit consolidation cost?
First and foremost, credit consolidation is a new loan with its own interest rate and repayment schedule. This is not a free service, so the borrower has to expect an overpayment of interest. However, compared to the cost of short-term loans, refinancing is more budget-friendly because:
- all loans have one fixed interest rate;
- the loan has a long repayment term and relatively low monthly payments.
Creditors offering re-crediting services may apply for a commission and a new loan. Other additional costs include:
- payment for notary services;
- state fees.
These costs should be borne in mind by borrowers who wish to refinance their mortgage. This type of re-crediting is more time-consuming, while short-term credit consolidation can take one day.
Active debts and negative credit history do not prevent the borrower from accessing credit consolidation, but in this case, the search for a suitable creditor may be more difficult and the proposed terms of re-crediting may be stricter. Our Buenas family also has creditors who work with borrowers in difficult life situations.
Combining loans with bad credit debtors is almost always available only as collateral. However, it is the re-crediting, not the current short-term loan, that can really help you get rid of the debt burden, so we recommend that you take advantage of creditors!
Credit consolidation is a service worth using in a timely manner to get a better deal and reduce the overall cost of your loans. Use our Buenas family platform and find a creditor that offers you the most appropriate credit terms!