A loan is a bilateral agreement. One party to the contract is the bank, the other is the borrower. The contract has effects for both parties. It comes into effect when it is signed. When concluding a loan agreement, the bank is obliged to provide the borrower with a specified amount of cash. This appropriation is intended for the purpose set in the loan agreement. The borrower concluding the loan agreement undertakes, on the other hand, to use the amount of cash provided by the bank in accordance with the contract. In addition, the borrower undertakes to repay the loaned amount together with interest due. It is also the obligated party to cover the costs of the loan. The loan repayment dates are set by the loan repayment schedule, which is part of the contract. By signing a loan agreement, the borrower also undertakes to pay installments on time.
While we have one small credit on our account, the situation is virtually imperceptible. With medium income, we pay the monthly installment of the loan without any problems. For example, a TV set purchased for example was our dream for a long time, but we never had enough cash to buy it. that’s why we decided to take a loan to buy a new TV. We succeeded without major sacrifices, and the fact that we pay installments is practically unnoticed. Thus, we acquired the ideal product at a low cost and, most importantly, at hand. The ease with which it came to us, the small load (the installment is not big) and the fact that we can enjoy the product immediately, often makes us start to live like that. One loan came easily and we immediately met our whim, so why not do it again and again and maybe the last one. And so we get a few or a dozen or so low loans from one low loan. The repayment of one was not felt. However, the combination of several small loans into a whole, as a consequence, gives you a monthly installment of installments that we are no longer able to bear. In this easy way, we have fallen into a loan loop. In this situation, a consolidation loan comes in handy.
A consolidation loan consists in consolidation or a combination of several liabilities into one loan. By combining several installments into one, we will receive not a few individual installments, but one consolidated one. A consolidation loan is a new agreement that adapts the terms (if possible) to our capabilities. Of course, our debt will not be lost. However, through consolidation, we will be able to extend the loan period and therefore reduce the amount of a single loan installment. Thanks to the fact that our installment will decrease, we will be able to regularly pay off our commitment. Interest on late repayments will not increase.