An option to stop making several payments each month is the consolidation loan, to unify the debts and save interest.
In many Spanish homes are paid monthly number of shares and fixed many of them are personal or mortgage loans more expensive and make life difficult to cope with variable costs. One solution to this problem is loan consolidation, which, as its name indicates it is when you gather all claims into one just to pay a single monthly fee for all loans that are taken.
Some of the reasons why it is very beneficial to opt for this new type of loan is because it may be that with the numerous payments you have to make the client to ignore any of them and although they are of little value, they have to pay interest by default, another reason is that each loan has a different interest rate, credit cards and personal loans are short-term debts that usually have higher interest rates, unlike the long-term loans.
Loan consolidation is also known as refinancing of debt and works in several ways, one of the most common is to expand the home mortgage to pay off the rest of the loan, so you pay a single fee at the end of the month. Another way is to request a new loan to pay off all outstanding shares, the disadvantages of doing this is that under the conditions of indebtedness in which the customer is hardly able to access new credit.
The basis of all debt consolidation is trying to save and to lower debts by converting short-term loans such as personal loans and credit cards in long-term loans have interest rates much lower. By doing this the right way can reduce monthly payments by up to 50%, however it is very important to note that doing this also extends the life of the mortgage.
It is essential to take into account certain variables when it comes to debt consolidation, the most important is to study the total amount of the debt and the payment period for each of the loans, once done perform the calculation of an extension of your mortgage or you might consider a new loan, while performing this exercise remember to add the costs of modifying the mortgage. The figures will give you the reason, perhaps you should consolidate only temporarily, may end long-term debt for many more years than planned.
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Debt Consolidation
It is important to know that refinancing or debt consolidation can lower your monthly payments reach up to 50% reunited into a single loan.
What is the consolidation or debt consolidation?
For some people with credit problems debt consolidation may be a solution. Debt consolidation is borrowing enough money from a lender to pay all debts. When you reunifying their debts:
1. You make only one payment each month to the new lender.
2. Generally pay less money each month.
3. You usually pay more money in finance charges to consolidate debts.
4. The payments will last longer.
Please note before consolidating
Before you decide to consolidate your debts, consider other possibilities.
Talk with family members about the problem. See if you can reduce expenses or increase income.
Find a financial advisor. You can go to a credit counseling service. They can present a solution that you have not thought.
Call your creditors to see if you can change the monthly payments so as to reduce pressure. Creditors may be willing to adjust the payments.
After you decide
If you decide to consolidate your debts, compare your options. There are different ptace where you can go, such as banks, credit unions and finance companies. Before you decide on who will get the loan, find the following information for each location:
1. The charge for the service.
2. The annual percentage rate (APR).
3. The amount payable monthly.
4. How long you have to make payments.
5. How much is the total amount you pay.
6. What happens if you miss a payment.
7. What happens if you make a late payment.
Making only one payment per month may make you think you're better off than where you really are. You may be tempted to buy other things on credit, and before you realize you may have a worse problem: too many bills with too little income.
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