How to pay less debt: consolidation

The debt consolidation is a financial instrument that allows you to consolidate debts undertaken by loans and / or loans, possibly obtaining liquidity. ticklekitchin.com has more details

The party that has subscribed to loans for which the related installments is paid obtains a new sum loaned by a bank or financial institution and uses it to settle its previous debt situation.

This tool is useful when the client is unable to pay the loan installments in progress on a regular basis, allows for debt extension and access to new resources.

Therefore debt consolidation offers consumers:

  • the possibility of extending the duration of the loan already underway and therefore reducing the amount of the individual installments;
  • a means on which to make the previous loans flow (in the case they foresee the clause of the early extinction), thus maintaining only one relationship with a single institution, unifying various installments into one.

With debt consolidation, there is the simplification of a complex debt exposure divided into several loans. In particular it allows to have:

  • only one installment per month;
  • a single fixed rate for the whole duration;
  • only one deadline to be honored;
  • only one creditor financial institution.

The person applying for the consolidation must reach an agreement with a financial institution or a bank. The latter, after the stipulation, usually proceeds to extinguish the debts in course by the contractor, spreading them on a new financing plan characterized by longer timings and lighter installments (the objective is to allow the return in easier conditions for the consumer).

To be able to combine the various installments the type of previous debt is not relevant, nor the diversity of financial creditors.

Before granting a debt consolidation loan, the financial institution will make an assessment of the applicant’s financial capacity.

Generally, whether or not the loan is granted depends on:

  • from the institution’s risk policy,
  • from the level of income and financial reliability of the applicant.

However, we recommend using credit instruments with caution and responsibility, especially to avoid situations of over – indebtedness, which can lead to the inability to honor their debts.