Credit consolidation and debt centralization: principle and advantages
Using a loan is a quick financing option when the budget for a project is high. Taking out several different loans can lead to over-indebtedness when your financial situation deteriorates. Credit consolidation allows you to centralize your debts and clean up your charges.
An interesting solution to centralize your debts
The operation of credit consolidation is relatively simple. A person who has several outstanding loans will contract a new loan to settle the amounts remaining due to 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. Consolidation of credit and centralization of debts generally involve an extension of the repayment period. It is recommended when you are having difficulty repaying your debts, following a change in your life such as loss of income, divorce or illness.
The advantages 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 monthly payments is recalculated according to your debt capacity at the time of subscription to the credit consolidation. This helps to rebalance your finances. Depending on the profile of the borrower and the new capital to be repaid, it is possible to free up a certain budget that can be allocated to a new project. Keep in mind that this type of operation involves an extension of the repayment period. However, you will have a clearer view of your loan by dealing with a single point of contact.
Centralize your debts through credit refinancing
The interest rates and the conditions for obtaining a credit consolidation vary according to the lending agency. It is therefore essential to simulate the operation to have an estimate of the monthly payments and the new due date before signing. The simulators take into account in particular your sources of income, debts to be centralized in order to offer you the offers corresponding to your profile. It is generally advisable to get help from a broker to make sure you find a contract that suits your situation. Acting as a trusted third party, he will present you with the possible options and indicate the various costs associated with the operation. Combined, brokerage, file, release, and other fees weigh heavily. However, they can be integrated into loan consolidation.