You have several ongoing loans: a car loan of €22,000, a mortgage of €158,000, and a personal loan for the renovation of your garden amounting to €8,500, for example. What are the reasons for a credit consolidation refusal?
You are experiencing some administrative difficulties in managing three monthly repayments and you are wondering if consolidating your loans would reduce the total amount of your monthly repayments.
What could be the main obstacles to achieving these credit consolidations?
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What is credit consolidation?
Credit consolidation aims – in a way – to carry out a loan grouping. In the example cited below, you have three separate monthly payments to make. By consolidating the three outstanding loan balances, you will have only one loan with a significantly lower monthly payment.
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What are the benefits?
Firstly, from an administrative point of view, you no longer have to think about paying your three installments each month to different interlocutors. With credit consolidation, you only have one ongoing loan and one interlocutor.
Secondly, it is obvious that the sum of three separate installments results in much higher repayments than if you only had one ongoing loan, even if the amount of this loan is higher.
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The main reasons for a bank to refuse a credit consolidation?
- You will likely have difficulty obtaining a credit consolidation if you are already in a contentious situation, meaning if you have not paid your installments on time. In this case, you will be registered 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 repayment history;
- Your banker will analyze the quality of the guarantees offered to protect themselves in case of default;
- If you are married, both spouses must consent to and sign the credit contracts.
