What is debt consolidation or loan consolidation? Debt consolidation is a financial product (in particular a loan) that allows you to “consolidate” (hence the name) debts taken on through previous loans or mortgages. In other words, debt consolidation is a tool through which the consumer can benefit from lower monthly installments, and more suited to his spending, allowing him to get more liquidity resources.
Why resort to debt consolidation?
We have no doubt given a sufficient definition of debt consolidation. But why do we have to resort to debt consolidation? If a customer, a family, is in financial straits, he often asks for a loan, then two, then three with a single result: lack of liquidity and the cost of the sum of unsustainable installments. The solution to this problem is debt consolidation. In fact, with debt consolidation a financial institution “acquires” our debts, often giving us new liquidity, and spreads the installment over a longer period of time and above all with lower installments.
When and how is debt consolidation possible?
It is possible to use debt consolidation in three cases, which represent the debts that can be consolidated: all personal loans, all those for consumer credit and those deriving from revolving credit cards.
To carry out a debt consolidation recourse is made to a financial institution which, having accepted the request and settles the outstanding debts of the contractor. The amount requested is thus re-negotiated with lighter timescales and installments: the objective is to allow return in more comfortable conditions.
Obviously, debt consolidation must not be done by previous lenders, in fact the reverse usually happens.
Who can apply for debt consolidation?
In general, any debtor can apply for debt consolidation, however it changes case by case. For example, the consolidation of the debt for the self-employed and the artisans is inextricably linked to the tax return. Instead, in the case of the consolidation of the debt of bad payers and foreclosures, he proceeds to consolidate the debt through the sale of the fifth.
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