At the beginning of September 2019, a law specifying a maximum interest rate for consumer loans of up to 20% and a maximum of USD 150 per annum for other loan costs came into effect. The legal reform will make it easier to pay off earlier loans with a compound loan.
Easy payday loan help debt consolidation for you
With the legal reform, the combination of loans is beneficial as the new interest rate cap applies to both compound loans and ordinary consumer loans. There are more loans available that are better in terms of cost and terms than previous high-interest loans. However, it must be remembered that consolidation of loans is only useful when all existing loans are set off at once and no new loan is taken.
In order to take full advantage of loan consolidation, you must first ensure that …
- You have a number of loans that are open and expensive enough.
Combined loans are usually large because they are intended to cover the outstanding balance of several loans at once.
- You do not need a new loan during the repayment of the compound loan.
The idea behind loan consolidation is to ease your debt by clearing all your past loans at once. A new loan that is raised on a compound loan is not the solution.
Once you have found these two points to be true, you can feel free to go on https://www.paydayloanhelpers.com/payday-loan-consolidation/ site and find the payday loan help debt consolidation for you. We will now look at how to do this.
1. Make a list of your current loans
To begin with, you should list all your current loans from credit cards. Make sure that all outstanding loans and expenses are included in the listing.
2. Calculate how much compound loan you need
This item is linked to the previous section as the amount of the compound loan depends on the outstanding debt balances and total cost of your existing loans. The compound loan should set off all of your outstanding debt at once. Therefore, it is important that you thoroughly determine the total balance and total cost of your loans, including the margin, nominal interest rate, effective annual interest rates, possible account opening and maintenance fees, and other loan costs that increase the total cost.
For example, you will find the balance of an open credit card on your last invoice, and you will also find information on the total cost of the credit on the credit terms of the same invoice.
Balance outstanding: USD 800
Payment term: 12 months
Monthly payment: USD 73.15
Account Management Fees: USD 3
Total annual cost: USD 877.76
After calculating the total cost of all your loans, add up the total cost of the loans on an annual basis. This total will determine the amount of the compound loan you need. Your goal is to find a loan that has a lower total cost than the total cost of your current, stand-alone loans.
3. Compete for your compound loan
Combined loans should compete with all other loans and consumer loans. With the entry into force of the new interest rate cap, bidding for compound loans is your best chance of finding the most cost-effective solution to your debt situation. The new interest rate ceiling makes the comparison of loans clearer, as the interest rate on the loans may not exceed 20% and the total cost of the loan may not exceed USD 150 per annum.
When getting a loan offer, consider the total cost of the loan and the repayment period. Reflect on options for your financial situation and choose a loan for yourself based on the following criteria:
- The total costs. The total cost of the loan must be lower than the combined cost of all of your loans.
- Payment time. You will be able to pay off the loan as quickly as possible, leaving money for other living.
You can bid on your compound loan at the loan comparison service. Although the legal reform on the 20% interest rate cap did not take effect until September 1, the share of loans above 20% was already very small. Most of the loan deals available have interest rates of 7-15%, which is on the same line with traditional banks and credit cards.
4. Take out a new loan and pay off your old loans at once
This is a simple and straightforward tip, but a compound loan is not helpful if you are only paying off a portion of your existing loans. If you do not pay off all your loans at once, you will find yourself in a situation where you will pay off one extra loan once the total cost accrues. With a compound loan, you set off all your loans at once and pay off your new loan at more favorable terms.
You can maximize the savings on your compound loan by choosing a quick payout schedule, as extending the payment period will always increase the total cost of the loan.