You would like to consolidate these 3 loans to have a single monthly payment that is lower than the sum of the 3 separate payments.
What could be the main obstacles to achieving these credit consolidations?
What is credit consolidation?
Credit consolidation aims – in a way – to perform a credit grouping. In the example mentioned below, you have three separate monthly payments to make. By consolidating the three outstanding loan balances, you will only have one loan with a monthly payment that is significantly lower.
What are the advantages?
Firstly, from an administrative point of view, you no longer have to think about paying your three payments each month to different parties. With credit consolidation, you only have one ongoing loan and one point of contact.
Secondly, it is quite evident that the accumulation of three separate payments resulted in much higher repayments than if you only had one ongoing loan, even if the amount of this loan is larger.
The main reasons for a bank to refuse a credit consolidation?
- You will likely have difficulties obtaining a credit consolidation if you are already in a contentious situation, meaning if you have not repaid your monthly payments on time. In this case, you will be listed with the National Bank of Belgium;
- Your banker will analyze your debt ratio, which should never exceed 35 to 40% of your monthly income;
- Your banker will take into account your credit repayment history;
- Your banker will analyze the quality of the guarantees offered to protect against default;
- If you are married, both spouses must consent and sign the credit contracts.