Consolidated Credit

The easy temptation to resort to credit often leads to the accumulation of several loans, taken out from one or more financial entities, with different charges and which often lead to uncontrolled debt. This results in a high rate of effort that prevents the granting of new credits and puts the personal financial solvency of those involved in question.

Nowadays, the offer of credit available on the market is large and can involve: housing credit, consumer credit, credit cards, car credit, etc. Short-term and small-amount credits, such as credit cards and consumer credits, are the most penalized as they normally have higher interest rates.

Consolidated credit what is it?

Consolidated Credit results from the combination of several credits into one, with the aim of reducing monthly charges on multiple loans, achieved through the negotiation of a single interest rate and a more favorable maturity.

How to obtain credit consolidation?

One of the ways to lower the financial costs and effort rate of an individual or company is by renegotiating existing credits, combining them into one, with better conditions and lower monthly financial charges. The way to achieve this objective involves:

• Reduce the overall interest rate on loans, as individual rates, particularly those on small consumer loans or credit cards, are heavily penalized.
• Another option that can be used in the credit consolidation operation is to increase the maturity of the consolidated loan, lengthening the repayment period and thus achieving a lower interest rate. The combination of short, medium and long-term loans in a single contract and a single maturity reduces the overall interest rate on the credit.
• When there is a mortgage loan, this is an operation that can be carried out with the bank where the loan is based, trying to reduce the spread and offering in compensation the domicile in that bank of credits contracted with other banks or financial entities.
• Credit consolidation can make use of an additional option: using a property mortgage. If there is already a mortgage on that property, as long as its value is higher than the existing mortgage, this option is still valid. A mortgage loan generally has a lower interest rate of up to 3%-5%.

When debt is spread across many credits, coming from different entities and with different modalities, the credit consolidation operation can reduce monthly installments by between 20% and 40% and up to around 60%, with mortgage credit)!

What are the advantages of consolidated credit?

The most obvious is the reduction of monthly financial commitments, achieving financial health that excessive debt does not allow.

The second has to do with the granting of new credits, especially when it comes to housing loans. Whenever a bank evaluates a loan request, one of the first measures is to assess the applicant's credit risk. To do this, start by evaluating one of the most important indicators: the Effort Rate. Now, credit consolidation, by reducing the monthly installments of existing credits, will allow this rate to be reduced, facilitating the approval of new credit and enabling better financing conditions.