In past years, the relative ease of access to credit and the commercial simplicity with which some loans were offered (especially targeted loans and revolving credit cards) have contributed significantly to the over – indebtedness of people and families; indebtedness which most of the time seems to be linked to the shortness of the amortization periods of the loans and which implies an excessive accumulation of monthly installments.
The need therefore arises to have a single loan, consolidating those in progress, at advantageous rates and spread over the medium or long term, which allows extinguishing all open positions while maintaining a single monthly installment.
Debt consolidation allows you to reorganize all the existing loans
It is possible to incorporate, in fact, one or more contracts, signed both with the same bank or financial institution, and with different financial institutions, in order to pay off all loans in progress and pay in substance a single debt with a single installment per month.
The goal is to make the repayment of debts sustainable, simplifying the customer’s debt burden and thus remedying a monthly amount of expiring installments that can no longer be tolerated by a family or by an individual and which risks leading to one state of insolvency. We speak of a “refinancing” useful for those who have difficulty following the times or the refund amounts.
In addition to the obvious advantage of having to manage the payment of a single loan and dealing with a single lending institution, it benefits from the possibility of having a single reduced monthly installment which is again sustainable for the debtor; in fact, thanks to the lengthening of the repayment times of the debt, the overall amount of the installment to be paid periodically undergoes a significant reduction.
When Should You Really Apply for Debt Consolidation?
In order for the transaction to make sense, certain conditions must be met: the consolidation loan must be of medium or long duration, therefore from 8 years upwards and preferably with a rate similar to that of the loans to be closed.
Furthermore, the payables to be paid must be of short residual duration: it obviously would not make sense to pay off a debt with a residual duration of 9 or 10 years with another 10-year loan because the installment would not be reduced.
Debt Consolidation and Bad Payers: Can Everyone Really Claim It?
Although the debt consolidation solution is designed for those who find themselves in financial difficulty and need to rebalance their situation, based on their new economic needs, it is also important to consider that the consolidation loan is still a loan. Credit institutions therefore have the right to verify the creditworthiness of the applicant in order to assess the real capacity to cover the new refinancing.
Often people think too late about the possibility of a debt consolidation when the situation is unsustainable and the first payment delays have already started. In these cases, the reporting of insolvency to the Credit Information System makes the granting of other credits very difficult.
It is true, however, that debt consolidation can also take the form of assignment of a fifth (as well as a loan for consolidation) and can also be obtained in the presence of any bad reports.
Each situation is obviously different and requires careful analysis and evaluation. Study the best practicable strategy and find the solution that best suits your case.StarSave Finance checks all databases in order to have a complete picture of your debt position and evaluating the necessary conditions to be able to intervene.