It is during this holiday season that you want to delight your readers with a great method that will save you money on a loan repayment if a loan or more has already been taken. It should be mentioned that I have personally tried the credit consolidation method.

As a result, the minimum payment fell from € 112 to € 75. As soon as I have paid off the loan in full, my additional savings will be another 157 euros.

## The Purpose of the Procedure

You need to formalize a loan refinancing for the amount of debt for one or more loans. But the money received must cover exactly the entire amount of debt, zero. Where, then, is the advantage of credit consolidation?

- Reduced annual rate because you initially borrowed at a rate of 21%, but managed to consolidate your loans at 19%.
- As a result of credit consolidation, the monthly payment is reduced. This is achieved thanks to a smaller loan amount (you only take the debt for the remaining amount of debt) with the same maturity (in my case, 5 years).

## The basic principles are now clear, let’s move on to the details

1. Reduced annual rate. To do this, you will need a few hours to familiarize yourself with the most popular credit consolidation programs. Then you call the bank that gives the loans at the same rate you are currently paying on your existing loans, or even lower, and asks the question, “I have a loan debt of X at an annual rate of M%, the residual value is Y. Can I apply for a credit combination with D% per annum? ”This is exactly what I did, and the most interesting thing is that I answered yes in my first phone call. I hope the same happens to you.

2. Reduced monthly contribution. Why is it going down you already understood from the above, but now you have this dilemma: Which of the economics options to choose? You must answer this question independently, depending on what goal you want to achieve.

- You can save on monthly payments only because of the difference between your previous payment and your current payment. But the trap is that you will have to pay twice the annual rate: pay off your previous loan and repay the loan pool. If the new loan repayment mechanism is an annuity schedule, you will pay half of the annual percentage in the first third of the repayment term.
- Reducing the annual rate of overpayment is possible by early repayment of a loan combination. In other words, the difference saved on the annual rate is immediately reviewed for repayment, thus paying off your debt more quickly, paying the rate only for the actual period of use of the money.

## My example

I canceled 2 credits with a total outstanding debt of € 2660. Every month I make payments of € 41 and € 71 in good faith. The annual borrowing rate was 18% and 21% respectively. I saw an advertisement from a competing bank and called them with an offer to lend me a compound loan at an annual rate of 17.9% (this is exactly the amount that was stated in the advertisement).

I explained to the bank staff that I made all the payments properly and that I could increase my credit history as it is an additional opportunity to save on an annual rate.