Taking out a new loan to reduce your debts sounds very strange and inconsistent in your ears.
That is understandable, but when you have read this explanation it will probably become a lot more understandable.
It’s like that. You have different debts. You have a credit card, two different loans and you are red on your bank account. You pay a considerable amount of interest on all these loans every month. By taking out a new loan where the amount is high enough to repay all loans at once and not to be red in your own bank account, you save a lot of money every month on various interest and repayment costs.
You only pay monthly interest and repayment costs on one loan. The amount that you lose on a monthly basis is always many times lower than when you have to pay interest on various loans. Another advantage of cleaning up your debts is that your financial burden will become clear again. You see every month at a glance what you spend on interest. It is then only one amount instead of four different amounts that are all repaid in a different way with a different repayment period.
When you have different loans, this is a good and easy solution.
You no longer need expensive agencies that make your financial picture clear. You can do it yourself.
When you take out a new loan to clean up your other debts, it is advisable to borrow a higher amount than you exactly need to combine your debts. This amount ensures that you do not have to apply for a loan again. You can put that amount into a savings account to save for financially more difficult times, or you can give yourself a relaxing weekend away. Because debts are always more exhausting than is thought.