Unifying debts into a single credit is one of the best solutions to get out of debt and reorganize your personal finances.
It happened to you that, suddenly, one day, do you realize that you are full of debts? You need a solution: unifying your debts is an excellent alternative. I will explain everything with this case, that of Albano M.
Albano had these credits:
- A mortgage loan, and he had many years to go.
- A free use credit with which he had paid for the master’s studies.
- Three credit cards
- A Rapley Credit
- A family loan, with which he was defaulting.
He showed me the statements and statements, and we easily saw the picture. Debts involved interests . And these were not always the same. The rate depended on what product it was, who lent it, how much money and how long. I explained to Albano that:
There are debts, such as mortgages , that have very high amounts and lower rates than other financial products. One of the reasons for estimating the rate is that the risk is low, because the property supports the debt.
Free credit availability or consumption
These are used as a means to achieve something better for the future: buy machinery and equipment or pay for education, as in the case of Albano. The rates are higher than the mortgage because the amounts and terms are lower than the mortgages and, this is very important, the risk is considered high for the financial institution.
We frequently receive calls congratulating us on our handling of the credit card with the offer that we have pre-approved a loan that you can use in whatever you want. The procedures are simple and you must decide in hours or days if you want to take this great opportunity. The question you should ask in these cases is, what rate does the credit have? Some are not as good business as you think.
Credit cards are very expensive
Very comfortable, of course. In addition, they give points and miles and gifts. But you pay the highest rates of all financial products offered by legal entities. They are small amounts, terms up to two years, with very high interests. If you look at the account statements of your cards, you will see that your purchases do not always have the same rate. It depends on what you buy with them, whose card it is (bank or store) and the brand it supports (MasterCard or Visa, for example).
Loans from family and friends can be “cheaper” in economic terms but very expensive in terms of relationships. You know, sometimes, these businesses end badly. Albano was very concerned with this issue.
Luckily, Albano had alternatives. These were the ones we studied.
Alternatives to unify your debts
A purchase of mortgage debt
It was very clear that the rate Albano was paying for his mortgage loan was higher than the current average rate in the market. He had not realized that he was paying more money for his house! Transferring the loan to another bank would imply expenses, of course, but also significant savings. I would pay less interest.
It was possible that Albano obtained a mortgage loan for more value than he really owed for his house. That extra value could be used to pay off other debts through a home equity loan. Benefit: better conditions in the mortgage loan and money to pay everything you owe, saving a lot of money in interest.
Parallel credit card or parallel credit
This modality has been growing by giant steps for a few months in our country. It consists of asking a bank for a credit parallel to the credit cards; that is, a value equal to the quota that you already have approved. The bank will give you a new credit card and pay for you the debts you have with the other cards. That credit is cheaper than the interest you pay on the cards. Well, at least you should check if you’re going to order one.
Credit with mortgage guarantee
This alternative is good, very good, if you owe a large amount of money and have a property that you can offer as collateral. Home equity loans are cheap, because the risk is relatively low for those who lend the money.
Albano quickly understood the solutions and asked us to process a home equity loan. What pleased me most was that he was able to pay his family’s loan.