The reunification of loans is the process by which all the credits and debts that we have pending repayment are grouped into one. Thanks to this operation, each month we will only have to face a single installment, instead of having to pay several installments whose total amount adds up to more than the single installment of the reunited loan.
In short, with this we obtain an easier debt to manage, not only because we have to face a smaller amount per month, but also because the process of paying it is concentrated in a single payment. Of course, we must bear in mind that, if we go to the option of reunifying loans, we will have to do it with all the debts we have. It would not be worth grouping a set of debts and not others.
How to do a loan reunification?
In general, the reunification of loans is usually carried out by a mediating company, although if the loans that we have pending to return are all in the same financial institution, it may be the bank itself that offers to carry out this process.
Similarly, whoever is in charge of the reunification, it requires a prior study of the creditor’s situation. This study analyzes the total amount of capital that we have pending to return, the interests that we are paying and the schedule of amortization terms that we currently have. It is quite common that, to form the new single loan, an asset or a set of assets whose total value is 20% higher than the total amount of the loan to be returned is required as collateral.
Once this guarantee has been presented, the entity in charge of carrying out the loan reunification will present us with its new payment proposal, the new monthly installments to be paid, the amortization schedule and the new maturity term that we are facing. If we accept the proposal, the mediating entity will contact our creditors to negotiate with them the new payment terms of the loans that we had pending with them. Once this negotiation has been carried out, we will proceed to the cancellation of all the debts that we previously had and to the constitution of the new single loan.
Advantages of reunifying loans
As we mentioned at the beginning of the post, one of the main advantages of reunifying loans is that we went from having several debts to one. In the first case, we had to face a fee that was too high for our ability to pay, while when we reunited the loans, we would have to face a single fee that was smaller and easier to manage.
The main advantage, therefore, is the relief we gain in meeting our financial obligations, readjusting them to a schedule and to conditions that are much easier for us to assume.
However, this option is far from being without disadvantages and risks. Let’s see some!
Disadvantages of reunifying credits
Joining our debts into a single one implies a series of expenses that should be taken into account.
Thus, since reunification is associated with the early cancellation of all our loans, the most common thing is that we will have to pay the usual early cancellation fees that these types of financial products usually have.
On the other hand, to unite our debts, we must formalize the opening of a new loan, with all the associated expenses that this may entail. For example, the opening commission and study expenses.
Furthermore, if it is decided to manage the reunification through a mediating agency, it will charge its own fees and, in case of reunifying the debts through our own bank, they usually charge commissions for the reunification operation.
These are all costs associated with managing the reunification process, but they must also be added to the costs of the new single loan itself. Obviously, if the creditors finally agree to delay the repayment period of all the debt owed to them, it will be at the cost of higher interest.
Although it may seem that this is not the case, because the monthly installment is reduced, the total number of installments increases so, finally, the amount that we return to our creditors will be greater than what we initially had with them.
On the other hand, we must also consider the risk of losing the asset or assets that we have put as collateral if we do not comply with the return schedule of the single loan that we have.
As you see, reunification of loans has its advantages and disadvantages. Before opting for this option, it is important that you check accounts and values if it is convenient or not to opt for a single loan.