A loan to pay debts does not reduce the number of liabilities. Nevertheless, borrowing to pay off debt is useful in several cases. It lends itself to settling liabilities to institutions that agree to installment payments only in exceptional circumstances. For example, the tax office usually insists on immediate payment of tax liabilities and agrees to installments for a maximum of three to six months.

Most people find liabilities to friends and relatives unpleasant, so they can borrow them to repay payday loans. Another variant of the debt settlement loan is payday loan consolidation at https://paydayloanconsolidation.net/, where a borrower replaces costly loans with a new bank loan.

Even the mere balancing of the disposition credit or a negative balance on the credit card account actually represents a loan to pay debts. In this case, the application for a bank loan to account settlement makes extremely sense, as current account credit associated with high-interest rates and the calculation of compound interest.

Payday loan consolidation companies: Trusted by thousands 

Many consumers who borrow to pay debts have a poor credit rating or an irregular income. This is especially true for those who are looking for a loan who have debts with friends and relatives or who fully exploit their repayment credit. In this case, a financial institution offers itself as a credible partner for borrowing to pay off the debt. In addition to the main income, all additional income is included in the budget statement.

Corresponding information can be found on the homepage of a bank. In the case of negative private credit, private credit-free loans from Switzerland are possible. However, a loan from a domestic bank that does not rate a single soft negative entry as an exclusion reason for lending is generally more favorable. Again, the financial institutions concerned usually point to the website.

There are good opportunities to get a loan to pay for debts, which consumers want to repatriate loans with a good credit rating. In this case, they ensure that the new bank loan is linked to flexible repayment options. In addition to the right to special repayments without prepayment interest, these include the possibility of occasional suspension at a rate. Before borrowing to reschedule old debts, bank customers check whether they have to pay prepayment interest for the replacement of the previous loans.

In this case, the interest saved on the new and cheaper loan must be offset against the cost of the prepayment penalty. With regard to the processing of loans, a special feature of rescheduling is that the bank does not transfer the loan to the customer’s checking account, but directly transfers it to its existing credit accounts, thus offsetting them. This common practice is not always possible with credit card accounts as some card issuers reject payments by third parties. In this case, the transfer of the relevant partial amount takes place, exceptionally, on the bank account of the borrower. This also applies to the share of the new loan, which was used to offset the discretionary credit, and to any top-up amount.

It is advantageous for the consumer if the bank enables it to exclude particularly cheap loans such as real estate financing, a car loan or interest-free financing via a dealer from the debt consolidated. This is possible with many, but by no means with all financial institutions. A credit comparison shows various discounted offers for debt settlement. In these cases, the bank reduces the interest rate on a dedicated loan when the customer uses the bank loan to reschedule. These offers are interesting when a consumer takes out a loan to pay off debts and repatriate existing loan agreements. It is nevertheless indispensable

Personal loans to pay debts

Through websites for credit intermediation between private individuals, a loan can be used to pay debts, even if the credit rating is weak. Private lenders look more closely at the reason for the loan request than at classic credit ratings. They give out a loan to pay debts if these are tax debts or liabilities in the private sector. Balancing the disposition credit or a credit card account, most private lenders also consider eligible to approve the loan requests. By contrast, most private lenders are more reluctant to reschedule existing bank loans.

For the most part, they are more likely to encourage credit inquiries from consumers who rely on a loan than requests from platform members who only want to save on borrowing costs by rescheduling them. On the other hand, if the replacement of the previous loans primarily serves to extend the term and thus reduce the monthly loan installment to be paid, private lenders will again be helpful.

Thus, when applying for an organized personal loan, it is indispensable to emphasize the necessity of borrowing to overcome a difficult financial situation.