Sign up for a credit consolidation loan
If you have some payment credits, have you considered consolidating them all into one? By doing so, you can not only reduce benefits but also see your monthly budget increase. If you are in a more complicated economic situation and are almost over-indebted, a credit consolidation loan can help you achieve better financial management.
The truth is that sometimes we have a few loans from different banking institutions: from the home loan to the loan we made for our dream vacation or even the financing requested for a higher amount of surgery.
In addition to the payment of monthly payments sometimes being on different dates – which makes the monthly management of our money very difficult – we also have conditions that vary from bank to banks, such as commissions and interest rates.
Thus, one solution to consider will be to consolidate all loans into one. But don’t get carried away by the lowest installment you will pay. Sometimes when we find ourselves with more money, we buy more products and services that we don’t always need, which can get us into a snowball of debt.
Consolidated credit: more advantages than it looks
By consolidating multiple loans into one, you will typically achieve longer repayment terms and also lower interest rates. This is because all your loans go to just one financial institution, with a single interest rate and a single monthly installment.
As a result, this one-off monthly payment can be reduced by up to 60% compared to the total installment of the various credits previously held.
In addition, you will be able to pay fewer bank charges as you will only have one credit at one financial institution.
Another great advantage of this type of financing is that it has only one payment date, allowing the consumer to have an increased ability to manage their monthly budget, avoiding delays or even defaults on payments.
Types of Consolidated Credit to Reduce Installments
There are two types of credit consolidation you must retain.
Consolidated Mortgage Credit
One of them called consolidated mortgage credit – and as its name implies – encompasses home loans, consolidating smaller loans along with home loans.
If you do not have a home loan, you can give the house where you live as a bank guarantee to meet the consolidated credit. This type of consolidated credit allows you to reduce monthly installments substantially, while also having the possibility of having a longer-term.
Non-Mortgage Consolidated Credit
On the other hand, non-mortgage consolidated credit does not, of course, include mortgage loans. This type of consolidated credit does not allow such a significant reduction in monthly installments to be paid, nor will the maturities be so long as the debt is not so high.
Regardless of the type you choose, the payment terms are renegotiated and the monthly installment is reduced with the bank you choose.
So let’s see what steps to take to reduce monthly installments through consolidated credit.
Step by step to reduce monthly installments
1. Conditions of access
To apply for a consolidated credit, you need to consider some factors.
First and foremost, you must have a maximum age of 75 to apply for credit. Therefore, you will not be able to apply for a consolidated credit if you exceed this limit.
In addition, you must be in a stable professional situation. Demonstrating to the bank that it can meet the monthly payments of its consolidated credit – especially as it will allow you to reduce installments – is an asset to being able to see your application approved.
If you are in default, or even if you are already blacklisted by Banco de Portugal, you will hardly see your approved consolidated credit application. In situations of default, you should first consider renegotiating the credit in question.
Finally, another condition for securing consolidated credit to reduce benefits is the need for a guarantor.
2. The choice of consolidated credit
After considering the conditions of access, you should analyze the various options on the market. Only in this way will you be able to decide which of the best-consolidated credit meets your specific needs.
Attention should also be paid to the terms of payment, interest rates, and fees charged and the duration of the contract.
We advise you to make a simulation to find out which financial institutions have the best-consolidated credit for you, as well as how much you can reduce benefits.
3. Reply from the financial institution
Subsequent to choosing the bank and having made the request to consolidate its claims, the financial institution will review its credit history and meet the necessary conditions outlined and ultimately approve or reject your request.
But even if it is approved, it is important to keep in mind that this solution does not solve all your financial problems.
This is a starting point for more balanced management of your monthly budget, but you should be aware and realize that increasing your debt repayment period usually leads to an increase in the overall cost of credit due. the increase in interest rates.
Consolidate or not? That is the question.
In reality, it all depends on your financial situation. You should first perform the necessary calculations and analyze all the data thoroughly to understand whether or not credit consolidation is the most beneficial solution for your personal finances. You can always choose to renegotiate your credit terms first.
There is, therefore, no right formula for reducing benefits. Consolidated credit is, of course, advantageous, but you should not take advantage of the lowering of the monthly payment to borrow more or to spend beyond your means.
Thus, consolidated credit, when consciously purchased and tailored to your needs, helps you save money but also allows for more fluidity in the available monthly budget.