Borrowers often have not only one loan to pay off, often there are several loans. There are the discretionary credit, the installment loan for the new bedroom and the car loan. Under certain circumstances, a mortgage financing is added. You quickly lose track of the monthly installments and the related interest payments.
All credit providers charge different interest rates, usually the terms are not identical, as it requires either a meticulous bookkeeping or the borrower threatens to lose track. With the loan consolidation, the borrower should again get a better overview of his financial obligations. As a rule, credit consolidation is a debt restructuring. With the debt restructuring, all outstanding Loans to put his credit together. The borrower accepts a new loan, the amount of which he can replace all other existing credit obligations.
With the loan consolidation the borrower reaches clear and orderly financial conditions, since he now only has to serve one borrower and the only monthly loan installment can calculate much better. It may be advisable to seek advice so that credit consolidation does not incur higher costs. Depending on the loan amount of outstanding loans, a simple installment loan is sufficient. Some banks offer special loans for debt restructuringon. In any case, one should mention in the loan application that the loan should be used for loan consolidation. Otherwise it may come to a rejection of the loan application, as there are already various loans. In any case, the burden on the consolidation loan should be below the level of the previous loans. But even if the savings are only marginal, the credit consolidation is worthwhile, as the financial burdens of just one lender are much easier to understand.