Debt Reunification: What is it? When is it worth it?

Do you have several active loans or accumulated debts?

If this is your case, you are likely to pay an exorbitant amount in interest and commissions for each of the loans individually.

In addition to how annoying it is to have to remember the date on which they charge the different monthly fees to be prevented.

In this situation, there are many people who choose to reunify their debts to make the day to day easier and, moreover, cheaper, to be able to save some money in the interests of the loan.

But what does it mean to make a debt reunification and how is it possible?

What does “Reunify your debts” mean?

What does "Reunify your debts" mean?

When we talk about reunifying your loans or debts, we mean the fact of unifying all your loans, credits and mortgages into a single debt.

In this way, you get to pay much less than what you previously paid for all the installments separately, since it is a single installment that comes from a single loan.

It is possible that in recent years, given the difficult financial situation we are going through, you have requested several credits online in the act of small amounts but somewhat expensive in terms of interest.

If this is the case, it may be easier for you to unify your loans into one instead of paying several monthly payments to different financial institutions.

You should know that reunifying your loans and debts is not a free operation, because you might have to pay certain commissions to cancel your loans in advance, but the benefits that will entail doing so can be very numerous.

Do you have doubts about how to make a debt reunification? Here is an informative guide that we hope will help you to better understand the reunification process.

Debt reunification: when is it worth it?

Debt reunification: when is it worth it?

As we have said, a debt reunification will allow you to collect all your debts in a single monthly installment.

Who can benefit this process?

First, this process can benefit people whose financial situation has changed and are not able to continue paying the monthly amounts previously agreed in their loan agreement. By making a debt reunification, people in this situation may be able to pay a smaller amount per month, but for more months.

On the other hand, a reunification of debts can be positive for people with several active loans whose interest rates are very high, as it will allow them to settle these payments and open a new loan at lower interest rates.

To know if the process of debt reunification would be positive for you, the best option is to use the debt reunification simulator offered by the entity in which you are interested, so you can know first hand what the monthly fee to pay for your specific case

What should I consider before conducting a reunification?

What should I consider before conducting a reunification?

Before hiring a debt reunification, you should keep in mind that this process is not a good solution for all cases or situations.

There are cases in which the total to be paid with a reunification of debts can exceed the debt that is currently paid by combining the different fees.

You should also remember that the reunification of debts is not a free process : when you do it, you will have to pay the financial consultant that manages your case, you will have to pay the fees for early repayment of your loans and probably, you will have to pay commissions for the study of your case and the opening of your new loan.

That is why you should not only calculate how much the total would be taking into account the interests of the new loan, but also the costs and commissions associated with the reunification.

Debt Reunification – Do I have the right to retract?

Debt Reunification - Do I have the right to retract?

Suppose that after informing you about the reunification of debts, what it is and how to request it, you have decided to carry it out in order to save money on interest.
Therefore, you have followed the process, you have contacted your bank and they have accepted that request.

Once they have accepted the request, you will have to sign a contract showing that you agree with the clauses and the interests of the reunification. You accept and sign that contract but, what if you regret it and want to cancel it? it’s possible?

The answer is yes. It is possible to retract and cancel the contract despite having been signed. However, it is important to mention that you can only cancel it within 14 days after signing.

If you want to cancel it and more than the indicated days have passed, according to the current legislation, the bank will be able to continue with the reunification of debts.

Do debts have to have the same interest to request a debt reunification?

Do debts have to have the same interest to request a debt reunification?

When requesting a debt reunification we assume that you have several outstanding loans.
The loans that you have requested can come from different banking entities, they can be of different monetary amounts and of course, they can have different interests.

Thus, when reunifying your debts, it is not necessary that your loans have the same interests. Once they have reunited you will have a single installment with an interest rate.

Types of debt reunification

Types of debt reunification

When you reunify your debts, you can find two types:

  1. Reunification of debts with mortgage
    This type is based on reunifying the mortgage with other types of debts such as: a car loan, credit card, etc. It is the most common option since people combine mortgage debt with other types in order to pay a fee and have greater control over expenses.
  2. Debt reunification without mortgage
    This second type of debt reunification does not have mortgage debt. Therefore, it is based on requesting a loan to be able to collect other outstanding debts and thus pay a single installment, canceling the other previous outstanding loans.

Here is an example of mortgage debt reunification:

Imagine that you have different debts as it appears in the following table. A mortgage debt, a loan debt in order to buy a car and finally, a credit card debt.

Monthly mortgage fee $ 500
Mortgage pending fee $ 40,000
Monthly car fee $ 200
Car pending fee $ 7,000
Monthly card fee $ 50
Pending card fee $ 280

Putting together all the monthly installments of each loan, you pay: $ 750
If you decide to reunify all your debts with an interest of 4% and a term of 30 years, your monthly installment to be paid would be: $ 225.72

Therefore, monthly you will end up saving money since you would only pay an interest on a single debt.
You can calculate the reunification of debts, going to our list of loans and clicking on the bank that you are interested.

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