According to current legislation in our country, the consolidation loan is a structured loan that can cover amounts up to 30 thousand USD and provides for a maximum amortization of 120 months. Whoever requests it, is able to deal with the various open loans with more financial institutions, obtaining a single debt towards a single subject to be repaid with a lower installment. Additional liquidity is often obtained.
This type of loan is granted based on the credit history and reliability of the person requesting it. Who is not present in the “blacklist” of the Risk Center and is not subject to Crif reports, can almost always acquire it without problems. Certainly, the situation changes according to the bank’s policies, each of which uses its own criteria to avoid situations of insolvency and the income of the applicant. The higher it is, the lower the ratio between salary and monthly payment to be made. The possibility of obtaining the loan is even easier in this circumstance.
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Debt consolidation is a financial product that can stabilize the previous debts we have taken on with loans or credit cards. This is a loan that, especially in this period of severe recession, is getting a strong response among the population in Italy.
Concrete economic support comes, therefore, to our aid when we find ourselves faced with a series of debts to be paid. In this case, the applicant unites the various loans in a single installment: its amount will be less than the sum of all the installments to be paid and managed. The amortization will obviously be longer, but the monthly outings will be less demanding for the family. This type of loan differs from personal loans or those for consumer credit and allows all previous loan contracts to be extinguished.
A financial institution provides financing to meet debts. If we have debts with a bank, it will be the second to which we will turn to worry about extinguishing it. We will be indebted to the latter for the payment of the installments. How exactly does the entire process work? When we illustrate our situation to the financial institution, this will have to evaluate the request and if it accepts it, it will pay off the debts that we contractors have activated with others.
Then we will be asked for the amount back, but with different timing and installments. They will be studied according to the needs of those who have contracted the debt so as to allow them to return in more favorable conditions.
What are the guarantees required by a banking institution?
It may happen that in some cases, to limit the risk of insolvency, the financial institutions submit to the applicant a contract that provides for the repayment of installments, or a single bill, able to guarantee a part of the entire amount disbursed. However, the most widespread form of guarantee is the signature of a third guarantor, who acts as a guarantor of the success of the operation. This is a rather widespread request in Italy, in the presence of special conditions, such as an applicant with recent seniority, or with a particularly large amount of the consolidation loan or some small payment, the problem had with the loans that you intend to consolidate.
In any case, it is not possible to establish rules that are valid a priori since the possible request for guarantees is at the discretion of the individual Institute, which decides on a case-by-case basis, depending on the risk profile of the transaction and the individual applicant.
Individuals are not the only recipients of the loan to pay off debts
But in addition to being aimed at closing loans that have opened in the past, debt consolidation can also be a valuable tool if we need new liquidity, provided that early repayment is provided for old loans. Individuals are not the only ones able to take advantage of this form of loan to pay off debts previously contracted. The loan to pay other loans is, in fact, very often a real business technique.
The company can pay off all debts accumulated, for example, in the short term, by moving them to a new form of financing, perhaps at more favorable rates or with longer repayment periods. Especially in times of crisis, financing to pay debts is a real strategy for having lower installments, and therefore useless liquidity to pay off debts. According to experts, cash flows are very beneficial.
What happens in the event of non-payment?
The interruption of the repayment of the loan entails the immediate non-fulfillment of the financing institution and the risk of unpleasant consequences. The interest due would be increased, with the application of a fine. In addition, there is a risk that your name will be included in the list of latecomed payers and will be reported to 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. Failure to timely pay even a single installment authorizes the lending institution to unilaterally terminate the contract. The customer will be required to pay all bank and protest charges as well as all the costs incurred by the Institute to recover the sums due, in addition to a possible penalty.