The consolidation loan ensures a lower capital and interest installment, which is a lower monthly burden on the household budget. There is also the other darker side of this solution, i.e. a longer loan period and a commission for granting a consolidation loan. It should be remembered that a longer loan period means a higher APRC loan cost. The term ‘actual annual interest rate’ is expressed as a percentage of the total loan amount per annum. In addition to interest, it also includes other loan costs (e.g. commissions, fees, costs of additional services necessary to obtain a loan).
When applying for a loan, we must be aware that it is necessary to ensure timely service for all our obligations. If we have arrears in previous payments, which has been registered in the BIK databases, it may result in refusal to grant a consolidation loan. Each financial decision should be well thought out beforehand so as not to fall into a credit spiral that causes a larger accumulation of financial arrears. To sum up, consolidation loans are a good solution provided that their contract is a well-thought-out move considering financial possibilities.
Let’s check carefully the provisions in the consolidation loan agreement. We make decisions wisely devoting as much time as necessary to the contract. Don’t be misled by advertising in the press or television. The most important are messages that we obtain ourselves. Information such as interest rate, commission and additional APRC costs are the absolute minimum that you should know before signing. APRC, i.e. the actual annual interest rate, is a date that should be known in detail, because the total cost of the loan repaid depends on it. If someone is unable to find any information on their own, they can always go to any bank and get the answers to the questions we are interested in. When analyzing the loan agreement, you should carefully read all the paragraphs and sub-paragraphs. They are as important as the messages on the first page in large font. Paradoxically, the most important information is found here. Very often, bank branches use links to notes at the end of the document. They usually have the smallest font, but they should never be omitted.
Finally, a small warning. Once signed, the contract is binding and its termination is long and involves an expensive procedure, the completion of which often requires going to court. It is much safer to spend a moment longer reading the contract carefully than to make a bad decision hastily.