Non-bank services are used by more and more people. A significant part of them repays at the same time more than one loan. What to do if the monthly installment exceeds our financial capacity? A good solution may be the consolidation of payday loans
Quick and easy payday advance consolidation
Consolidation of payday loans at banks is a loan whose purpose is to repay existing liabilities. It may apply to both loans and short-term loans that are becoming more and more popular. In banking, the term consolidation refers to combining two or more liabilities into one. This allows you to lower the monthly installment and pay “only” one debt. In addition, the interest rate and repayment terms of the new installment are then unified.
Consolidation refers to various types of debt. Thanks to it, we can combine cash, renewable, car or installment loans. Consolidation may also apply to installment loans, payday loans, credit cards or revolving limits on your account. What’s more, using this solution allows us to consolidate not only private but also corporate obligations.
Depending on whether we decide to consolidate payday loans at a bank or loan company, we will have to meet different conditions. In the first case, the bank will examine our creditworthiness. The assessment of creditworthiness is independent of whether we are applying for consolidation of payday loans or for granting credit or loan for repayment of liabilities.
The bank will check us in the debtors’ databases, verify the form and stability of our employment and the number of earnings received. Thus, if we do not have sufficient creditworthiness, consolidation of payday loans at the bank will not be possible. It is also often necessary to establish security.
It looks a bit different in loan companies. The creditworthiness of a potential client is much milder than banks.
We can apply for a loan to pay off other liabilities if:
- we are in the age required by the lender (we must be over 18),
- we have an ID card,
- we are the only account holders in one of the Polish banks,
- we have a permanent registered address in the country,
- we receive a steady and regular income.
After completing all the formalities, we can receive money for the repayment of outstanding obligations even within one business day.
Is consolidation payback pays off?
Consolidation of payday loans is a cost-effective solution that brings many benefits. The most important of them are:
- convenience – instead of many obligations incurred sometimes in various loan companies, we pay only one,
- standardization (and often also extension) of the repayment date,
- lowering the monthly installment – a longer repayment period translates into a lower installment,
- additional cash injection – if we decide to consolidate payday loans, we can simultaneously apply for additional financial resources.
Remember, however, that extending the repayment date will improve our liquidity, but at the same time will raise the cost of the commitment.
Before we decide to consolidate payloads, let us consider such aspects as:
- The number of installments to which we will spread your commitment – the monthly installment will depend on it, the longer the repayment period, the more we will pay for our debt.
- The time when we are applying for consolidation – the most important thing is that there should be no delay in repayment, so it is worth to apply for consolidation of payday debts well in advance.
- The amount of the loan – the amount borrowed should be adjusted to our financial capabilities and how much we need to pay off the payday. It is not worth lending more than our debt, because it creates the temptation to multiply additional expenses.
Maybe refinancing of liabilities?
The concepts of payday consolidation and refinancing are often used interchangeably. Wrongly. Although the purpose of both is to improve our financial situation, these are two different solutions.
The essence of refinancing is that we take on a completely new commitment, the purpose of which is to pay off the previous one. Debt refinancing mainly applies to cash and housing loans. What combines consolidation and refinancing are incurring a new liability towards repayment of the previous one.
The difference is that with consolidation we regulate not one, but several obligations. If we do not want to use consolidation or refinancing, we can apply for an extension of the repayment date. Before we decide on it, let’s check whether the lender offers such a possibility and what fees are related to it.
Bank or loan company?
Consolidation of payday loans is possible both at the bank and in the loan company. However, it is worth knowing that in a bank outlet you will not find a separate product with that name. Whether a given bank will enable us to consolidate payday loans depends on its individual policy. Some banks allow only for consolidation of liabilities contracted by the competition, ie in other banks. Others also offer consolidation of payday loans that we took in loan companies.
If we receive a consolidation loan in a bank, it is worth knowing that we will not get the money “on hand”. In such a situation, the bank will settle our liabilities ourselves and we will be the debtors of “only” the entity that granted us the loan. However, changing the lender or borrower is not the main goal of consolidation. The consolidation is all about minimizing the monthly costs of debt service. It is worth using it when the monthly installment exceeds our financial capacity.
Remember that each financial institution has its own rules on which it grants consolidation loans. Consignment consolidation offers may differ in terms of the loan term, interest rate and APRC. The maximum number of commitments that we can combine into one is also different. Before we decide to consolidate payday loans, let’s get to know different offers to choose the one that best suits our needs. Let’s also pay attention to the parameters of the new commitment. All costs related to it are important so that finally it does not turn out to be more expensive than the previous one.