An effective way to improve financial liquidity and organize your personal budget is to consolidate liabilities. Choosing the right offer can be difficult, however. To facilitate this task, we compared the proposals of thirteen banks.
According to the Trend Loan report, at the end of 2018, consumer loans (installments and cash) repaid 8,188 thousand. people. In the same period, 4,931,000 credit card holders and PLN 7 250 thousand users of limits in bank accounts. Only in the last segment, there was a 1.8% decrease in year-on-year terms. In the first two areas, a moderate increase was observed – 1.3% for consumer loans and 0.4% for credit cards.
Simplified procedures and easy availability mean that we are increasingly seeking financial support from banks and loan companies. We use in parallel with cash loans, installments, car loans, account limits or credit cards. Simultaneous service of many obligations may result in unintentional delays in repayment of installments, which in consequence may give a shadow to the assessment of the borrower at BIK. Unprincipled use of easy credit can also lead to serious financial problems for the debtor.
Please view our consolidation loans to pay off payday loans
A payday loan consolidation is a solution addressed mainly to people who want to clean up their payday loans, as well as to borrowers anticipating temporary troubles in repaying their debt in a timely manner. PDLC logo offering payday loan consolidation a solution repays the existing payday loans indicated by the debtor and consolidates them into one easy to control obligation. If the financial situation allows it, the borrower may request additional funds to be transferred as part of the consolidation loan.
A big advantage, especially for people forecasting problems with current financial liquidity, is the additional possibility of lowering the monthly installment. It should be remembered that this procedure involves the necessity to extend the financing period, which translates into an increase in the total cost of the loan. Detailed information about this solution is described in the article What is a consolidation loan?
The list prepared included listings of thirteen banks that decided to answer our inquiry and provided detailed costs of the loans they offer.
A model borrower is a 30-year-old man, employed on the basis of a contract of employment. He receives a wage salary of PLN 3,000. His monthly expenses close to PLN 1,200. The customer repays three cash credits. PLN 36,000 remained to be settled. Liabilities are repaid on time due to which and can boast of an unqualified assessment in the Credit Information Bureau.
In order to organize your finances, the borrower considers consolidating the existing liabilities. I also want to check what the cost of the loan will look like with additional insurance, and how much less the installment will pay if he decided to extend the repayment period from three to five years.
Consolidation loan for three years – option without insurance
Bearing in mind the above criteria, the cheapest offer comes from the Santander Bank Polska stable. By opting for the promotional credit of this institution, the customer would avoid commissions. In turn, the nominal interest rate was set at 6.73%.
These parameters translate into a monthly installment of PLN 1 111.46. The total cost of cash loan “Lighter installment” is PLN 3,115.55 – that is PLN 406.15 less than in the case of the second-best cash loan offered by ING Bank Śląski.
Consolidation loan for three years – option with insurance
The situation changes dramatically when the borrower decides to use additional insurance. The previous leader falls down to the 10th position, and the Nest Bank offer occupies the leading position. The loan of this institution is characterized by a nominal interest rate of 5.90% and a commission equal to 2.50%.
These parameters translate into a monthly installment equal to PLN 1 206.22, and the total cost of this liability is PLN 7,422.57. Nest consolidation is cheaper by PLN 57.43 than the Bank Millennium offer located in the second place. This is a much more subtle difference than in the case of a loan statement without additional insurance.
Consolidation loan for five years – variant without insurance
If the borrower decided to extend the repayment period to 5 years, and thus accepted the increase in the total cost of the loan, the cheapest offer would go to ING Bank Śląski. This liability is characterized by no commission and a nominal interest rate of 7.76%. These parameters translate into a monthly installment of PLN 721.46.
The total cost of this loan is PLN 7 287.95 – the Bank Millennium offer, which is ranked second, is more expensive by PLN 304.62. Comparing the ING Bank Śląski financial loan with the cheapest consolidation loan for 36 months (in the variant without insurance), it appears that extending the liability by 24 months results in a decrease in the monthly installment by PLN 390.00 and an increase in the total loan cost by PLN 3 372.40 zł.
Consolidation loan for five years – variant without insurance
Time for the most expensive option combining the extension of the repayment period and the use of additional insurance. In this variant, the leader’s position belongs to the Citi Handlowy offer. The proposal is characterized by a nominal interest rate of 5.99% and a commission equal to 6.00%. The monthly installment of this liability is PLN 793.00.
The total cost of Citi Handlowy’s loan is PLN 11 620,91. The offer of Alior Bank, occupying the second position, is more expensive by only 35.60 PLN. Comparing Citi’s proposal with the cheapest consolidation loan for 60 months (in the variant without insurance), it appears that extending the liability by 24 months results in a decrease in the monthly installment by PLN 413.22 and an increase in the total cost of the loan by PLN 4,188.34.
It is worth paying attention to the total cost of the loan
When deciding on the consolidation of liabilities, as well as on any other financial product, it is worth making at least a preliminary analysis of offers. Dedicated time can translate into appreciable financial benefits. Confirmation will be presented above. Let’s take a consolidation loan for 60 months under a variant with insurance.
The difference between the most expensive and the cheapest offer is PLN 9,501.34 – the amount next to which it is difficult to pass by indifferently. When analyzing offers, it is worth paying attention not only to the commission, APR or interest rate expressed in percent. It is also good to look at the amount of the monthly installment and the total amount to be repaid. Specific amounts are better suited to the imagination, allowing more precise adjustment of potential burdens to the possibilities of a personal budget.