Last Updated on Jun 8, 2021 by James W

Consumer loans allow you to own a thing now. Buy immediately, and not save and save. This is a temptation for many. As a result, the desire to possess wins over common sense. A person buys into the tempting offers of banks and the opportunity not to pay for the first two months. Takes one loan, a second, a third… And then suddenly, he realizes that the credit burden was too much. What to do in this situation?

Perhaps many customers of banking organizations are concerned about the issue related to the problem of debt. Therefore, banks have introduced the working concept of “credit consolidation” (lainojen yhdistäminen) to solve this problem. 

What is this function?

In simple terms, credit consolidation is presented as an opportunity for a bank client to combine their debts into a single chain, using several credit institutions. The term is quite similar to the concept of refinancing a loan but has a slightly different basis.

It is very important to distinguish between consolidation and refinancing. Such a distinctive feature is that when refinancing, the client successfully takes a more profitable loan to repay the old one. On the other hand, consolidation combines several loans into one, which makes it possible to reduce the total interest on payments.

Credit consolidation process

To consolidate a loan, a person will need to perform the following actions:

  • Search for the most profitable loan and its terms.
  • Get the found credit.
  • Repayment of previous debts to other banking organizations by payment.
  • Combining multiple loans into a single one.
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What are the benefits of consolidation?

  • Changing the terms of the loan to more favorable ones.
  • Release from past obligations.
  • Improving the credit rating of an individual client.
  • Reduction of the total cost of repayment of loans.
  • Simplify the loan repayment process.
  • Reducing the number of overdue payments.
  • An undoubted convenience, since you do not have to go to several organizations for the sake of payments.

Examples of consolidation

Let’s say a citizen has a number of loans in several credit institutions. These can be both mortgage loans and consumer loans. There is no special difference in this regard, and you can consolidate the loan for any purpose. However, with outstanding loans in several banks at once, repayment is difficult. To get rid of such difficult situations, consolidation comes to the rescue. In this case, a citizen applies to a certain bank to combine the available loans into one.

Reasons for failures

The bank does not specify the reason for the refusal. But in most cases, the reasons are the same as in other loans. For example, if, according to all the criteria of this program (age, experience, registration, etc.), the borrower “fits” the bank, then the main reasons for refusal may be: 

  • Insufficient income.
  • Bad credit history.
  • The bank received special information upon request from the relevant authorities, for example, about cases of fraud.
  • False information about the number of debts owed to other banks. For example, if some of the loans are refinanced, the client has not mentioned the other part.
  • The presence of overdue payments on the combined loans.
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So, the consolidation of loans in most cases is profitable and convenient, but you should properly weigh and calculate everything before you decide on it.


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