Whats debt consolidation? Visit us to learn more
When we talk about debt consolidation it means that we are referring to a financial product that is capable of “making solid”, ie consolidating, debts taken previously in the form of loans or mortgages. This type of loan is obtaining a certain response in Italy in recent years due to the pressing economic crisis that seems to be bringing a large part of the population to its knees. This is certainly concrete support for those who must pay off debts.
How does debt consolidation work exactly? The applicant must sign up for DeDebt for debt consolidation and combine the various loans in a single installment: the amount will certainly be lower than the sum of all the installments to be paid.
According to current legislation in our country, the consolidation loan is a structured loan that can present amounts up to 30,000 USD and a maximum amortization of 120 months. Whoever requests this financial solution will succeed in bringing together the various loans opened with different financial institutions into a single debt. In this case, reference will be made to a single subject and the installment to be returned will certainly be lower.
The financial institution to which we will address our request will obviously have to carry out the necessary checks and then, once the request has been accepted, it will deal with paying off the debts previously contracted by the subject. Later on, the credit provider will ask for the amount paid back, but both the timing and the installments will be far easier.
It is not uncommon for financial institutions to limit the risk of insolvency, also requesting the applicant to sign a contract that provides for the repayment of installments, or a single bill, capable of ensuring a part of the entire amount disbursed. The most widespread form of guarantee in these cases is given by the signature of a co-obligor or a third guarantor, which therefore guarantees the success of the operation.
This situation appears to be quite common, especially in some cases, such as the case of a person who has recent seniority of employment or is faced with a particularly large amount of the consolidation loan or if there has been some payment problem with the loans that you intend to consolidate. Debt consolidation is not aimed, however, only at settling debts previously assumed but can also be functional for obtaining new liquidity.
Is debt consolidation a strategy for companies?
Debt consolidation is not only for private individuals. In fact, the idea of applying for a loan to pay other loans is often considered a business strategy. What do you mean? Let us assume that a company decides to pay off all the debts incurred in a short time. The solution will be to move these “liabilities” to a new form of financing that may have more facilitated rates and longer repayment periods. The financing to pay debts, in this period of strong economic crisis, appears to be a convenient choice for companies as it allows them to obtain lower installments. Not only. It is also possible to use less liquidity to pay off debts: cash flows will be beneficial.
What happens in the event of non-payment?
The moment you fail to repay the debt taken on with the credit institution, you will face unpleasant situations. Failure to timely pay even a single installment may cause the lending institution to decide to terminate the contract unilaterally. The customer will have to bear the payment of all bank and protest charges but also all the costs incurred by the Institute to recover the sums due. It also includes a penalty.
Here are the main consequences:
• the interest due would be increased, with the application of late payment;
• there is a risk that your name will be included in the list of latecomers and / or reported to credit protection institutions (the Central Risks), which will share the information with the entire banking and financial system. The result will be a worsening of the customer’s creditworthiness and a consequent greater difficulty in obtaining credit in the future.