Large half-paid loans, three major deferred credit cards, and several outstanding mini-credits. When financial obligations pile up, reuniting debts can be a great relief. This alternative allows us to reduce the monthly installment of our debt by up to 50% or more by paying it at a lower average interest rate and in a longer term with greater peace of mind.
In addition, we will have a single loan instead of several. Of course, each situation is different and deserves a specific assessment. In this article we explain what we must take into account to know when to resort to this solution.
In what situation can it be interesting to reunify debts?
Any loan we request must be properly analyzed, but in this case even more. Mainly because it is an option that, if you choose it, should allow us to repay our debts on favorable terms. To resort to this solution, a series of circumstances must be met:
- Having significant debts. For certain reasons, we are at a time when debts accumulate for outstanding loans, charges on credit cards or mini-credits that must be returned. In other words, the situation in which we owe quotas that we cannot assume monthly.
- That we have to pay them in the short term. Not only is the debt to be repaid very large, but we also have to repay it in just a few months or a few years, which means that the fees are very high.
- That the interest rate on the debt is high. Especially in the case of credit cards and mini-credits, the interest they generate can be greater than 20% and they increase the outstanding debt.
This set of conditions means that we cannot meet the resulting monthly fee. If these three aspects are met, reunifying debts will be the best solution.
What are the main advantages of debt reunification?
In this situation, reunifying debts is a way to restructure our payments to be able to face them. This type of loan offers us two fundamental advantages:
- Reduction of the monthly fee. It is the key factor in deciding on this route. The monthly fee can be reduced by up to 50%. With a reunification of debts we will be able to lengthen the repayment time and, therefore, the monthly installments will fall to much more acceptable figures.
- The comfort. No more than four, five or six outstanding debts to attend to. With the reunification we will settle the previous debts and we will only have to pay attention to this new credit.
As we can see, the main (and very important) advantage is that we will be able to face the payments, which supposes an improvement in the quality of life.
What types of debt reunification loans are there?
Once we are clear that our financial situation forces us to request a debt reunification loan, we must choose what type of credit we choose. There are two kinds:
Loans WITHOUT home equity
- This type of loan is given when our financial profile is good and, despite having debts, the lender understands that we will be able to meet the resulting installments with our income.
- The main person interested in providing this type of loan is the entity with which we have the greatest debt.
- In the event of default, we will respond to debt with all of our present and future personal property, beginning with account liens.
Home equity loans
- They allow you to use as a loan guarantee a home without a mortgage or with a small mortgage amount payable.
- If we cannot attend to the payment of the debt, the house will become the property of the entity that has lent us the money.
- It is advisable to apply for this type of loan for large amounts. We shouldn’t risk our home for an amount that represents a small percentage of its value.
This loan allows us to access a credit to reunify debts at an interest similar to that of personal loans. And not only this, we can also use it for other purposes: paying taxes to access an inheritance, to be able to sell your home with ease or cancel foreclosures.