It is not uncommon for one to have many different loans from several different places. For example, you may have purchased capital goods such as TV, fridge and freezer, furniture, car etc. on installment. Unfortunately, the interest rates on these installments are usually very high. Furthermore, it may be that you have taken several smaller private loans as they also usually have a much higher interest rate.
It is in situations like these that it suits them very well to pool the loans into just one loan that is significantly more advantageous. If you want to collect your loans, there are two different types of loans that may be suitable for you. These are partly to take a better private loan or to mortgage a home that you own. A home loan can be an option for almost anyone while it requires certain things to be able to use a home as collateral.
Collecting Loans – Through a Mortgage
To be able to collect your loans using a mortgage, a number of things are required. First, you must own a house or something that can be used as collateral for the loan. If you have this then it is necessary that you do not already have too large a loan on the home. Namely, there must be space between the value of the home and the size of the current loan. Given that you can usually only borrow around 85% of the value of the house as a mortgage loan, the total loan at the moment may not exceed this amount.
If you have room for additional loans plus that you pass the regular credit check, this is the best way to collect the loans as a mortgage has the lowest interest rate of all loan types. If this is potentially an option for you, then it is the first thing you should look up. Another good thing about this type of loan is that it is often easier to get approved in the credit check since there is a security behind the loan.
Collecting Loans – Through a Private Loan
Unfortunately, most people cannot mortgage their home anymore, which means that a private loan is the best option if you want to collect the loans. This will cost more than one mortgage, but it will still be much cheaper than having a lot of expensive credits.
The interest rate on a better private loan is often less than half what it is on the more expensive private loans. This allows you to save a lot of money by acquiring a new larger loan which can then repay all the other loans. Furthermore, it is clearly much easier to keep track of just one loan compared to getting an overview of the majority of smaller loans.
Exactly how much money you save is very difficult to say since it depends on how much you have in debt, what interest they are on those loans, what interest the new loan has and for how long you have to repay. But if you have USD 100,000 in debt, it could very well be about USD 25,000 or more that you save. Another important factor is that you get smaller monthly payments, which makes it easier to get advice on all bills.
Another advantage is that a larger private loan can often be repaid over a longer maturity. This means that the repayments will also be reduced every month.
In order for you to be able to take out a private loan that is large enough to be able to repay all small loans, you must have an economy that can handle this as the lender will do a credit check. The credit check will check your income, job situation, debts, etc. If you are approved, you are only to congratulate as it will do wonders on the total interest costs each month.
It is very important not to borrow more than what is really needed. Even if you can borrow a little extra, you should not do this but just use the money to repay the old loans. Once you have repaid the new loan, you may want to consider borrowing again. But it still has to be careful.