The purpose of debt consolidation in the private sector is to combine multiple or multiple different, often smaller, liabilities into a single new loan or loan.
In most cases, consolidation saves money right away. Experience has shown that a new borrowing in the result is significantly cheaper than the previous debt with its different interest and payment conditions.
What should be considered in the debt consolidation
A consolidation offers itself at the latest when it is clear that the existing debt burden can not be permanently reduced. The monthly recurring payments for various small loans and liabilities can not be reduced, but rise by the lending rates. The syndicated loan, an installment or credit line, the credit card credit card and other liabilities in the mail order and online businesses add up to a bottom line, which rises rather than sinks. The payments are due on a weekly basis on different dates, for which the necessary balance must be available on the current account. The only way out of this situation is debt consolidation. It immediately brings a tangible relief in every respect.
In the future, a single loan payment will be due monthly. It can be scheduled in such a time that the current account always has a credit balance. The effective interest rate for the consolidation loan is definitely much cheaper than the interest on the disposition and credit card loan, but also for the smaller loans in the mail order business. For the borrower it goes after the consolidation in the truest sense of the word up. With each monthly payment, the debt repayment loan is repaid. Due to the favorable interest rate, especially during the current low-interest phase, it is possible to save at least a double-digit amount on a monthly basis. The money remains in the checking account and can be used elsewhere.
In many cases, debt consolidation involves switching to another financial institution.
The person concerned has to look for a bank or savings bank that literally carries along a consolidation because of its financial situation and its poor credit rating. The account holder is not involved in the debt consolidation itself. The liabilities are replaced by transfers directly from bank to bank. As a result, a single credit account with the new credit institution remains on the consolidation loan taken up there. The borrower must now make sure that all previous liabilities in the database of the private credit agency be deleted.
At the same time the new debt consolidation loan is registered as information in the . She is obliged to update her database. In order to fulfill this obligation, the must receive the necessary information from the creditors. Experience has shown that this is done after a few weeks and should finally be checked by a free self-report, to which every citizen once a year has a legal claim.