What is and how debt consolidation works

Decree Law 212 of 2011, introduced a financial service useful to avoid the over-indebtedness of households, namely the so-called debt consolidation loan .

Debt consolidation: what it is and how it works

Debt consolidation: what it is and how it works

Debt consolidation loan is a form of financing that allows all loan installments to be combined into one, smaller than the sum of all other installments, introduced in order to allow those who make use of it to be able to pay the debts with greater simplicity, delaying payments over time.

Consolidation may be required, whether the debts have been contracted with a single financial institution, or if they are loans from several different banks, with the additional possibility of receiving additional liquidity to cover unexpected expenses.

How to get a debt consolidation loan

How to get a debt consolidation loan

Obtaining a debt consolidation loan is a fairly simple operation, but you still need to meet certain requirements, for example:

  • Have an age between 18 and 75 years

  • Being in possession of a permanent employment contract

  • Having a 6-month seniority for employees and one year for self-employed

  • Have a good credit position

  • Perceive a pension

  • Be in possession of documentation related to other loans contracted 

Some banking institutions also require the signature of a contract by a third guarantor to act as guarantor.

To apply for a consolidation loan, simply select the bank or financial institution that best suits your needs, and make your request. If the answer is positive, it will be the institute chosen to pay off the previous debts.

It is important to underline, however, that only by possessing the aforementioned requirements will it be possible to obtain financing, which will not be granted in the absence of income, guarantees or if the applicant has been reported as a bad payer.

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