Reorganizing your finances is always a healthy decision. You’re not sure where to start? We give you a crash course on two tools available to you: debt consolidation and renewal.
Although they sound similar, they are not the same. Between consolidation and renewal there is a basic and important difference that you should know, because they are created for different purposes: consolidation is for someone who seeks to pay several debts in a single payment, and renewal is the replacement of an existing loan with another loan that I could benefit you with more time to pay it and a lower monthly payment.
The ABC of consolidation
This may be your scenario: you are paying credit cards from banks and / or stores and that personal loan you made for home improvement or any other purpose. And every month you receive in your mailbox invoices with different due dates. It is not surprising that you are overlapped and you miss the payment date, which will affect your credit. A debt consolidation loan could help you organize better so you can group all of these debts into a single monthly payment .
How does it work? You apply for the loan with a fixed interest 1 , and depending on how much loan you are approved to consolidate, with that money you pay some or all of your debts to your creditors. But beware: that does not mean that your debts disappeared, what happens is that now you will be making a single monthly payment, in an easier and more organized way.
Beyond the benefit of simplifying your life, consolidating can save you money. As? The fixed interest rate you will receive may be lower than what you now have on your store credit cards and other credit lines. Depending on the loan amount, the interest and the term of time that you will be paying this debt, you could have only one lower payment compared to the sum of all your debt payments before consolidation. Having a single loan you program to get out of those debts faster. And to complete, with a Lochinvar consolidation loan you can enjoy the option of 0 payments for the first 90 days 2 .
Renovation in times of crisis
In these times of economic challenges, renewal stands out as a financial strategy that must be explored when you have an individual loan and need more favorable terms to meet the payment. The good: you can receive a renewal when you consider it necessary.
Imagine this second scenario: you are paying your loan up to date and as a result your credit profile has improved. Don’t you think you should take advantage of this and manage to pay at a lower interest than what they gave you when you requested it? Maybe, lower the monthly payment or maybe get extra money? That is possible with a renewal loan 1 that offers you a better interest rate for your next payments.
So, in these times of economic instability there are options to manage your situation, be more relaxed and have a healthier pocket. Both alternatives can be used to manage your financial commitments.