How does loan consolidation work?


Did you know? In France, 46.5% of us have a loan. This is a lot and yet this figure has been declining continuously since 1989, since in 2008, we were still 52.6% to contract one.

Even if households and financial institutions are increasingly cautious, the accumulation of credits is still a topical danger for individuals. Fortunately, credit consolidation can be a comprehensive and reassuring solution for you and your budget. We explain to you why.

Multiple credits and debt risk

Multiple credits and debt risk

You may be in this case having contracted different credits at different times. Between consumer loans, which are very easy to obtain, those granted by your banker to finance your studies or your car, plus a mortgage, you can quickly pay several amounts each month at extremely fluctuating durations and rates.

According to figures from the Lite Lender, between 2008 and 2013, the average debt ratio of French households rose from 72.8% to 82.4%, an incredible increase of 10 points over five years. To avoid any risk of personal bankruptcy, credit consolidation seems appropriate in order to set the record straight, once and for all.

Credit consolidation, instructions.

Credit consolidation, instructions.

Who is he talking to?

Individuals, in their own name or married spouses, who reimburse different financial organizations each month. Obviously it could be the merger of two loans and much much more…

Going through a single bank, the grouping will “smooth” the monthly payments and organize the reimbursements in a single and same amount over a defined period.

How it works?

You just have to calculate the sum of all your outstanding credits, that is to say, what you still owe to the different banks. Once this sum is calculated, you get what professionals call the “total capital remaining due”.

This is where the bank or financial institution comes in to buy the sum of all your credits to offer you a global refund. This solution not only makes it possible to save on the rates you pay on each loan but also, in some cases, to repay faster than expected since it is your new bank that decides with you the cruising speed adopt.

How to choose a bank?

Like when you want to obtain a mortgage, it is wise to knock on several doors. The majority of banks offer free and anonymous simulations on their site and obviously the conditions and repayment durations vary from one establishment to another.

It is often wrongly thought that the bank that will buy these loans will offer an even higher rate, but it is a preconceived idea, in most cases, the general rate applied is much lower.

Once your bank has been chosen, it will take care of all the formalities to settle your outstanding loans and from now on, you will only pay at one and the same establishment.


And you, what do you think of this possibility and have you already carried out a credit consolidation? Tell us about your experience, the blog is there for that!



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