The consolidation loan allows you to convert many of your existing liabilities into one and reduce your monthly expenses for debt repayment. But it also has weaknesses, including greater formalities and increased total costs.

Many people find it difficult to balance financially without getting into debt. Incurring obligations force them to have random events or a desire to make their dreams come true.

According to Retro data, half of adult Poles (about 15.4 million people) have a financial product. Some – more than one.
And the more loans, the greater the risk of getting into trouble with timely debt servicing. In such situations, a consolidation loan may be helpful.

Consolidate your payday loans fast in 3 easy steps 

To merge your installments into one monthly payment, you must meet the conditions set by the bank and undergo a specific procedure.

The first step for payday loan consolidation is to submit the application. It indicates the length of the repayment period.

Then the applicant presents documents confirming the source and amount of income. It can be, for example, remuneration for work, disability or retirement – it is important that the impact is regular.

In the case of a consolidation loan, it is usually necessary to provide data on already existing liabilities. These are contract numbers and invoices.

After completing the initial formalities, the financial institution analyzes the application. It usually takes a few days. Much depends here on whether we apply for a consolidation loan at our bank or another (regular customers can count on shorter procedures).

In the event of a positive decision, we have to re-check the most important conditions and sign the contract.

Advantages of a consolidation loan

Advantages of a consolidation loan

Consolidation extends repayment time. The existing debt is spread over more parts, even 120-144 installments. As a result, the monthly payment is less than the amount paid so far.

The main goal and also the main advantage for the borrower is the reduction of monthly debt servicing costs. How does it happend?

Such a maneuver not only gives financial breath, but also improves the customer’s creditworthiness. In other words: when you take out a consolidation loan, you can apply for additional cash.

Another benefit is paying only one installment per month instead of several, as it was before consolidation. This facilitates and streamlines the control of your debt. Expenses become more transparent and easier to control.

The consolidation loan also has its drawbacks…

Unfortunately, consolidation loans also have weaknesses. The most important is to increase the total amount to donate. This is due to the extension of the repayment period and thus to a longer accrual of interest.

Additional costs may arise when merging liabilities. This includes, for example, a commission for granting a loan and a fee for establishing collateral (including the valuation of real estate).

Consolidation may also be longer than with a normal loan procedure. But this is not the rule. Some banks do not require documents related to the debt they already have, because they themselves collect this data from Retro.