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, monthly we will only have to face a single installment, instead of having to pay several installments whose total amount amounts to more than the single installment of the reunified loan.
In short, with this we obtain an easier debt to manage, not only for having to face a smaller amount per month, but because the process of paying it is concentrated in a single payment. Of course, we must bear in mind that, if we turn to the option to reunify loans, we will have to do it with all the debts that we have. It would not be worth grouping a set of debts and others not.
Let’s explain what this process consists of!
How to make a reunification of loans?
In general, the reunification of loans is usually carried out by a mediating company, although if the loans we have yet to repay are all in the same financial institution, it may be the bank itself that offers to carry out this process.
Similarly, whoever is responsible for conducting the reunification, it requires a prior study of the situation of the creditor. In this study we analyze the total amount of capital that we have yet to pay back, the interest we are paying and the schedule of repayment terms 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 repaid is required as collateral.
Once this guarantee has been presented, the entity in charge of making the reunification of loans will present its proposal for a new payment, the new monthly installments to be paid, the repayment schedule and the new maturity term that we face. If we accept the proposal, the mediating entity will contact our creditors to negotiate with them the new payment terms for the loans we had pending with them. Once said negotiation has been carried out, all debts we previously had will be canceled and the new single loan will be established.
Advantages of reunifying loans
As we mentioned at the beginning of the post, one of the main advantages of reunifying loans is that we go 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 reunifying the loans, we would face a single, smaller and easier to manage fee.
The main advantage, therefore, is the relief we gain when it comes to meeting our financial obligations, readjusting them to a calendar and conditions that are much easier for us to assume.
However, this option is by no means free of disadvantages and risks. Let’s see some!
Disadvantages of reunifying credits
Putting our debts into a single one implies a series of expenses that should be taken into account.
Thus, since the reunification is associated with the early cancellation of all our loans, the most common will be that we have to pay the usual commissions for early cancellation 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 commission for opening and study expenses.
In addition, 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 the management of the reunification process, but they also have to add the costs of the new single loan itself. Obviously, if the creditors finally agree to delay the repayment term of all the debt owed to them, it will be at the expense 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 placed as collateral if we do not comply with the repayment schedule of the single loan we have.
As you can see, the reunification of loans has its advantages and disadvantages. Before opting for this option, it is important that you take accounts and securities if it is convenient to opt or not for a single loan.