Do we have a chance for a loan with a bad credit history?

Very often you can find the statement that due to a bad credit history we have no chance of a loan or a consolidation loan without debt for the indebted . Is this really the case? Are people with  difficulties in paying their debts no chance for financial support? You will learn this from the text below.

Bad credit history – do we have a chance for a loan?

Bad credit history - do we have a chance for a loan?

Already piling up bills and financial obligations can be a headache. And what about when someone tells us that due to our bad credit history we have no chance for financial support from the bank. Is this really the case? Do we not have a chance at the bank for a consolidation loan without debt for the indebted? As a rule, banks have very restrictive regulations, which means that they provide financial support only to those clients who will be able to comply with them.

And even if we go a long way in applying for a loan, we may receive a negative decision. Then what? Seek support from family or friends? Not necessarily. After all, there are also loan companies on the market that no longer place so many requirements on their clients, and even those with debt have a chance for a loan or credit. An example of one of the most interesting products for those in debt is the consolidation loan.

Debt Consolidation Loan – What is a Financial Product?

Debt Consolidation Loan - What is a Financial Product?

It can be stated that a debt consolidation loan without debt is a financial product that will help you get out of serious financial problems. What does it consist of? The financial institution whose services we decide to use sums up all our liabilities and repays our creditors, after which it takes over our debt and creates a loan which we will have to pay back.

This time only one liability is left to be repaid, whose monthly installments are set so that the creditor can pay it off. It is worth remembering that the debt consolidation loan without debt was created with a view to helping in getting out of debt, so also the repayment time is adapted to our needs.


What does it mean to reunify loans?

The reunification of loans is the process by which all the credits and debts that we have pending repayment are grouped into one. Thanks to this operation, each month we will only have to face a single installment, instead of having to pay several installments whose total amount adds up to more than the single installment of the reunited loan.

In short, with this we obtain an easier debt to manage, not only because we have to face a smaller amount per month, but also because the process of paying it is concentrated in a single payment. Of course, we must bear in mind that, if we go to the option of reunifying loans, we will have to do it with all the debts we have. It would not be worth grouping a set of debts and not others.


How to do a loan reunification?

How to do a loan reunification?

In general, the reunification of loans is usually carried out by a mediating company, although if the loans that we have pending to return are all in the same financial institution, it may be the bank itself that offers to carry out this process.

Similarly, whoever is in charge of the reunification, it requires a prior study of the creditor’s situation. This study analyzes the total amount of capital that we have pending to return, the interests that we are paying and the schedule of amortization terms that we currently have. It is quite common that, to form the new single loan, an asset or a set of assets whose total value is 20% higher than the total amount of the loan to be returned is required as collateral.

Once this guarantee has been presented, the entity in charge of carrying out the loan reunification will present us with its new payment proposal, the new monthly installments to be paid, the amortization schedule and the new maturity term that we are facing. If we accept the proposal, the mediating entity will contact our creditors to negotiate with them the new payment terms of the loans that we had pending with them. Once this negotiation has been carried out, we will proceed to the cancellation of all the debts that we previously had and to the constitution of the new single loan.


Advantages of reunifying loans

reunifying loans

As we mentioned at the beginning of the post, one of the main advantages of reunifying loans is that we went from having several debts to one. In the first case, we had to face a fee that was too high for our ability to pay, while when we reunited the loans, we would have to face a single fee that was smaller and easier to manage.

The main advantage, therefore, is the relief we gain in meeting our financial obligations, readjusting them to a schedule and to conditions that are much easier for us to assume.

However, this option is far from being without disadvantages and risks. Let’s see some!


Disadvantages of reunifying credits

Disadvantages of reunifying credits

Joining our debts into a single one implies a series of expenses that should be taken into account.

Thus, since reunification is associated with the early cancellation of all our loans, the most common thing is that we will have to pay the usual early cancellation fees that these types of financial products usually have.

On the other hand, to unite our debts, we must formalize the opening of a new loan, with all the associated expenses that this may entail. For example, the opening commission and study expenses.

Furthermore, if it is decided to manage the reunification through a mediating agency, it will charge its own fees and, in case of reunifying the debts through our own bank, they usually charge commissions for the reunification operation.

These are all costs associated with managing the reunification process, but they must also be added to the costs of the new single loan itself. Obviously, if the creditors finally agree to delay the repayment period of all the debt owed to them, it will be at the cost of higher interest.

Although it may seem that this is not the case, because the monthly installment is reduced, the total number of installments increases so, finally, the amount that we return to our creditors will be greater than what we initially had with them.

On the other hand, we must also consider the risk of losing the asset or assets that we have put as collateral if we do not comply with the return schedule of the single loan that we have.

As you see, reunification of loans has its advantages and disadvantages. Before opting for this option, it is important that you check accounts and values ​​if it is convenient or not to opt for a single loan.