The lack of financial culture leads many people to assume debts without control: a loan for the car, the mortgage to buy the house, the financing in installments of the new television, several credit cards, etc. When they realize they have entered into a spiral of debt from which they are not able to leave. Almost everything they enter is used to pay loans. And then the option for payday loan repayment help appears.
In the face of the financial stranglehold on which they are subjected, many of these people see their only way out in the reunification of debts, that is, to collect all the debts they have in a single loan. For example, a person with a debt of 5,000 euros, another of 22,000, another of 1,800 and a mortgage of 100,000 euros, would be left with a single loan of 128,800 euros if he reunified the four debts.
HOW DOES THE DEBT REUNIFICATION WORK?
To begin with, it must be made clear that the reunification of debts is not available to everyone. Any financial institution previously makes a feasibility study to ensure that certain conditions are met and that the debtor can return the debt without too many problems. Therefore, depending on the volume of income and how much the debts rise, the bank will accept (or not) a reunification of the same.
Most of the time, reunification concentrates on a cheaper and more flexible loan that is usually of a mortgage type, with housing as collateral in the event of default. In other cases, it is required that another person is the one who guarantees the new loan and is responsible for the payment in the event that the debtor can not do so.
WHY IS IT DANGEROUS TO REUNIFY DEBTS?
To stop having many debts to have only one has its advantages (mainly, that you reduce what you pay month after month for them) but also numerous disadvantages. Reuniting debts is far more dangerous than people think.
To begin with, reunification is not free. On the one hand, it will be necessary to assume the expenses of early cancellation of the current loans, which in many cases are high. In addition, when applying for a mortgage loan you must also pay the formalization expenses. And if all this is done through an intermediary agency will be added the portion of the cake that is carried in the form of commission (around 4% of the total amount). As you can see, the operation has very high additional costs that the debtor will have to assume.
But the main danger of reuniting debts is that by lengthening the period of repayment of the same, the interest payment also increases and you end up paying a lot more money, to the extent that maybe you pay for that debt twice as much as I would have paid if reunification had not been done.
Therefore, is it interesting to reunify debts? In most cases, it is only a short-term solution to give oxygen to the family economy. In the long term, it is only advisable if the interest payment ends up being reduced, and this will only be achieved if the repayment term of the new debt is reduced.