The best debt consolidation, or the cheapest one? Where for such a consolidation loan?
There are several bank accounts, but to select such a favorable loan for consolidating debt, it is obviously a few bank offers to be compared.
A consolidation loan is a combination of several loans into one loan. Therefore, we pay only one loan at one time and we do not have to remember about several different payment dates.
Consolidation loans how it works
We can distinguish two types of consolidation loans. Mortgage and cash consolidation loans.
A cash consolidation loan is a combination of several different obligations, e.g. cash loans, installments, car loans, etc. The combination of loans (loan consolidation) means that the bank repays the client’s obligations with this new loan and usually offers better repayment terms.
Mortgage consolidation loan means that one of the consolidated loans is a mortgage (housing loan).
Who is the loan consolidation for? First of all, it is beneficial (and sometimes necessary) for people who have difficulties in maintaining financial liquidity due to the amount of several loan installments repaid.
The consolidation can also be used by people who have taken out loans / credits with a fixed (high) interest rate. Currently, Nabo bank interest rates are at a record low, but it should be taken into account that inflation will soon rise, and thus interest rates on loans will also increase.
The best consolidation loan – lower loan installment
In a selected bank, you can consolidate debt resulting from bank loans and cash loans, car loans, installment loans and consolidation loans.
It is also possible to transfer one loan to the bank and pay back on more favorable terms – refinancing the debt.
Often, as part of a consolidation loan, we can also borrow an additional sum of money. This new loan is, of course, included in the consolidation loan, and the loan installment anyway may be less than the sum of the loan installments previously paid. Why is it like that?
The new loan installment may be lower for two reasons: a lower interest rate or / and a longer loan period.
What is the best consolidation loan? If we pay attention to the price of such a loan, then of course the best consolidation loan is one that has the lowest total costs.