Consolidation is a combination, and in the world of finance it means combining different liabilities into one, in order to organize a person’s credit situation. When applying for credit consolidation at the bank, the client will have to submit a number of documents. What?
The application for a consolidation loan should be accompanied by your income documents, as well as all loan agreements signed to date, which are to be included in the bank consolidation.
Consolidation loan – when is it used?
When the borrower incurs several different liabilities at one time, including cash loan, car loan, mortgage, and at the same time uses a credit card and overdraft, it suddenly turns out that it has several installments monthly to repay. It is not difficult to get lost in all this, so you should think about the consolidation option.
Banks grant consolidation loans only to persons who reliably repay their current financial liabilities. You cannot equate consolidation loans with debt loans. If the customer’s credit history is negative and indicates significant delays in paying principal and interest installments, it cannot count on consolidation.
Lower loan installment
The main purpose of consolidation can be not only to organize repayment of liabilities – as a result, the client receives only one installment to pay, but also the goal can be to reduce the monthly financial burden. It is only necessary to remember that a lower capital and interest installment is usually followed by an extension of the loan period, and it is associated with an increase in the total loan costs.
How to apply for consolidation?
If we have already decided that we will seek consolidation in the bank, we should collect the necessary documents beforehand. This will speed up the stage at which the bank issues its credit decision.
As part of previous preparation, you should collect documents such as:
- ID card – a valid photo ID,
- certificate of the amount of monthly income, taking into account their sources,
- all credit or loan agreements held.
Sometimes, banks will also require submission of statements that in any bank, which the customer has used the offer for crediting, there are no delays in paying principal and interest installments, although the same information will also theoretically be obtained.
If the customer is interested in taking a mortgage consolidation loan, he will have to supplement the loan application with documents related to the property on which the mortgage will be established as collateral for loan repayment.