Why do a credit consolidation?

credit consolidation

Today, the credit sector occupies an important place in almost every household in Switzerland. Indeed, individuals and entrepreneurs opt for the granting of credit because of the many advantages. This is, of course, an advantageous solution for the consumer, but the accumulation of credits can also give rise to many problems. In practice, it allows rapid access to funds but it can, among other things, lead to significant indebtedness or an accumulation of credits. Indeed, when the indebtedness is too important, the worries with the rates, the monthly payments or the maturities are often inevitable. So, to remedy this kind of financial constraint, credit consolidation is a good alternative!

Credit consolidation: what is it exactly?

Credit consolidation is an operation that consists of merging all your credits into a single loan. This practice is often used in order to restructure debts. With all the available credit purchases we make every day, consolidating all the credits is the easiest and most effective alternative so you don't get lost with your repayments.

More concretely, the principle of credit consolidation is to bring together all your current loans into a single loan. This makes it possible to readjust the amount of the monthly payments according to the provisions and repayment capacities of a household. For this, a financial institution offers and undertakes to repay all the outstanding loans of a borrower. In exchange, the latter obtains a single credit contract with a single rate, monthly payment and maturity which are much more advantageous.

Under what circumstances should you consolidate your credits?

Buying on credit is an advantageous alternative for consumers who want to obtain quality goods or services. Everyone is shopping on credit now. But behind these innovative solutions, the reality is often very different. Under what circumstances do you have to consolidate credits? To answer that question frankly, here are some signs that you need to consolidate your credits.

An accumulation of credit

If you're having trouble keeping up with the number of loans you owe, know that you are the victim of a credit build-up. Indeed, you have made many purchases on credit or various loans that you have trouble managing. In this kind of situation, you must consolidate your credits to avoid delinquencies and the possible penalties that result from them.

Over-indebtedness

Similarly to the accumulation of credit, the over-indebtedness Usually happens when you can't pay off your debts. It can be your current charges, your monthly loan payments, etc. Over-indebtedness is blatant proof that you need to consolidate credit. This operation can save you from debt.

High interest rate on your loans

The average interest rate for personal loans is 9% for an amount between CHF 5,000.- and CHF 80,000.-. In contrast, the average credit card interest rate hovers around 12 %. With Lica, you can be sure that you will get better conditions and therefore pay less each month. A credit consolidation could therefore save you money on these interest charges.

Lack of a repayment plan

As a type of revolving credit, credit cards allow you to borrow and repay funds on an ongoing basis. There is no defined repayment plan. If you continue to use your card by paying only the minimum each month, you could get into serious debt. If you don't have a repayment plan, consider a credit consolidation now. 

Obviously, there are several reasons why you should consider doing a credit consolidation. It usually depends on individual problems. But in any case, it is an operation that offers more advantages than constraints.

5 good reasons to consolidate credit

1. To simplify your finances

Consolidating your credits can turn two, three or more payments into one. This can simplify the budgeting and dramatically reduce the risk of unpaid debts. You no longer have to worry about multiple due dates each month. In addition, the repayment amount is the same until maturity. You will therefore have an exact estimate of the amount owed each month.

2. Faster reimbursement

Consolidating credit can help you get your loans paid off faster. Especially if you have significant credit card debt. Credit cards don't have a set schedule for paying off a balance. On the other hand, a credit consolidation contract offers a fixed payment at each maturity.

3. A lower interest rate

If you consolidate your loans, not only will you no longer have several interest rates to take into account, but you also benefit from a much lower rate. Of course, the rates vary depending on your credit score, the amount of the loan and the duration of the loan. But by consolidating your credits with Lica, you will probably get the lowest interest rate on the market in Switzerland.

4. Have a fixed repayment schedule

By having a fixed repayment schedule, your payment and interest rate stay the same for the life of the loan. There is no unexpected fluctuation in your monthly payment. By merging all your credits, you will have a fixed repayment schedule and of course the exact amount of your credit.

5. To reduce your monthly payments

In correlation with all the advantages mentioned above, you can drastically reduce your monthly payments if you make a credit consolidation. With a single rate and a fixed maturity date, the amount will be significantly lower compared to a credit-by-credit repayment.

Credit consolidation with Lica

With Lica it's simple, fast and efficient! And yes, you make your request online in less than 2 minutes and then our specialized teams take care of the job. You save time and money!

To redeem your credits, all you have to do is make your request by clicking on the following button:

Do you have questions before making your request? Our advisers are there to answer your questions 7 days a week. Ask us for more information and we will be happy to answer you.

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