Consolidation: When do I use this feature to get out of the red?

13 Apr

Sometimes an unforeseen expense or a financial setback can make the bills go out of their way. The fact is that whoever is in debt lives asking themselves if it would be possible to pay off the balance quickly so as not to pay so much interest. On some occasions it is practically impossible to anticipate the installments and the final amount of debt can be well salted. If this is your case, we can teach you how to evaluate consolidation as a solution to your problem.

What is consolidation?

What is consolidation?

This is a mode of credit still little known in Brazil. It is a personal credit with a guarantee of a good.

Understand how it works

Let’s suppose that you, for some reason, have contracted a debt of $ 30,000. Of course, if you choose to go paying until the debt is over, you will spend a lot more than you really owe. This is because the interest rates applied can be quite high, especially those charged by credit card operators. So, you choose to consolidate and decide to give a guarantee (in the case of non-payment of the installments) some good, like your car. Thus, the bank understands that it is safe and that, in one way or another, it will receive the amount it lent you. Then you can get lower benefits and lower interest rates.

What varies is that in each modality different strategies are applied for the concession. If you need $ 100 thousand and have an apartment valued at $ 110 thousand, it will be very difficult to get the amount through consolidation. In the case of pledging residential property as collateral, banks usually release up to 50% of the current market value of the asset to the customer. In case the guarantee is your car, you can get up to 90% of the value of the property.

In addition to understanding how each situation works and the payment deadline that each offers, it is necessary to remember that there are operational fees that may be charged at the time of signing the contract. So, stick to each value and do the math before signing.

Who should use consolidation?

Who should use consolidation?

Consolidation exists to help people honor their financial commitments, reduce total costs with interest and also the value of benefits.

It is not only suitable for those who are heavily indebted and who, even using the modality, would never be able to balance their accounts.

Think carefully

Of course, anyone who takes out a loan or does a consolidate intends to be a good payer and fulfill the obligation. But it is good to reflect a lot when choosing the consolidate, because, you will give a personal property as collateral that will be sold on behalf of the bank until the total discharge of the debt. If for any reason there is a default of more than 90 days, the institution can quickly take the good and auction. If the amount calculated is less than the assigned credit, the contractor will still be required to pay the difference.

The tip is to calmly assess the situation. Do the math and see what works best for you. In any case, consolidation can be a good solution for those who opt for it consciously.