Consolidation of payday loans – in the bank or off-bank?

Although lenders have repeatedly encouraged you to borrow responsibly and proportionally to your options, many people still have trouble paying back loans on time. They fall prey to their carelessness and a too loose approach to financial issues, which is often expressed in taking a few payday loans at once. The accumulation of commitments can lead to very serious consequences. The solution to the crisis is consolidation of liabilities offered by various institutions – both banks and non-bank companies. In which of them will consolidation be more profitable and more accessible?

What is consolidation?

What is consolidation?

Consolidation is the term used to describe a loan or borrowing, the amount of which is intended for repayment of financial liabilities in other institutions. In such a situation, the financing institution does not give the client cash, but transfers the amount of the liability directly to previous creditors and lenders. Sometimes it is possible to grant a loan or credit in a greater amount than is actually needed and to pay the surplus to the client.

In this case, instead of paying back several payday loans at a time, the borrower can only pay back one liability spread over many monthly installments. It should be remembered, however, that consolidation is not debt and usually serves the purpose of paying off liabilities that are not yet overdue, although it is often the case that non-bank companies use the word consolidation also in the case of granting loans for repayment of debt.

Consolidation of payday loans in the bank – where and how can we use it?

Consolidation of payday loans in the bank - where and how can we use it?

Until recently, having outstanding payday loans, they could not be consolidated in the bank. These institutions were reluctant to approach non-bank loans, but with the intensive development of the industry and the rapidly growing number of borrowers using payday loans, they had to capitulate. At present, a large part of banks offer consolidation also for repayment of payday loans.

Why bank consolidation can be beneficial? The characteristic features of such loans are primarily a high amount of consolidation, reaching several dozen or even several hundred thousand us dollars (no more than 200 thousand). In addition, the costs of using this option will also be lower.  The maximum repayment period of a consolidation loan in a bank can be up to 12 years – so it is very large.

However, this solution can be used by people who have a fairly high creditworthiness and do not have any arrears in BIK.

Non-bank consolidation loan

Non-bank consolidation loan

The advantage of a non-bank loan over a consolidation loan is that it can be obtained by those who have been refused a bank loan. Definitely lower requirements for borrowers is one of the most common reasons why you should go to such an institution. Small formalities and most often the possibility of passing the entire procedure online are also a permanent distinguishing feature. So they will help those who are very close to the loan repayment deadline, and those who are in a very bad financial situation.

However, one should take into account that the amounts of non-bank consolidation loans will not be as high as in a bank, but in most cases they will be sufficient, even if you combine several payday loans with the maximum amount.

Jakassa is one of the few real consolidation loans available in non-bank companies. There, the borrower can get up to $ 16,000 in 12 monthly installments to pay his debts, but the majority of this amount will be sent directly to earlier lenders. The rest of the commitment will remain for any use.

Non-bank loans for any purpose

Non-bank loans for any purpose

Using an installment non-bank loan for any purpose can be as effective as a consolidation loan in a bank. The more so because loans are currently available with really long repayment periods of several years – this is not a dozen or so, but even several dozen monthly installments.

Of course, not every lender will agree to provide funding to someone who already has a very high creditworthiness. The non-bank offer is, however, so wide that certainly everyone will find something for themselves, and the additional advantage of such offers will be that payday loans may be overdue – so they can be repaid even after the repayment date. It is worth paying attention to companies that grant loans without BIK or loans without KRD.

Sharetum. It is one of the more trusted lenders offering loans without BIK, although the registers of debtors belonging to BIG will be checked. Therefore, loans cannot be overdue enough for the lender to have legal grounds to enter the debt into one of the registers. At Sharetum, you can take out a loan of $ 10,000 (5,000 if we are new borrowers) and spread the repayment into 24 monthly installments.

Yellow Finance. This is not a real lender, but an intermediary platform for social loans. In this case, the borrower has a chance that the investor will decide to grant him a loan, even if he has debts or has a negative rating in BIK. The maximum loan amount in this system is $ 12,000, spread over 24 installments.

Why use consolidation of payday loans?

Why use consolidation of payday loans?

Transforming many loans into one will not only bring relief to the borrower and protect him from the negative consequences of non-repayment, but will also have additional benefits. One of them is that the monthly budget will be unloaded, as the loan will be repaid in monthly installments. In addition, if the loan is repaid systematically and on time, the borrower will not “earn” negative entries in BIK, on ​​the contrary – he will enter in this register as a diligent and reliable person.