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, so you can pay off your existing loans in one installment at a time, saving you on the total cost of the loans.
At its best, a combined loan saves you thousands of USDos
The following calculation gives the total cost of the four loans. There are two credit cards and two consumer loans. The figures are fictional but realistic. There are two loans in consumer loans with very different cost structures. The second consumer credit has a higher interest rate and a more moderate account management fee as well as a loan opening fee.
The second consumer credit, on the other hand, represents a loan whose cost structure is more difficult to interpret: a low nominal interest rate on a loan may signal favorable loan terms, but a high account management and opening fee will significantly increase the total cost of the loan.
As the examples above show, with the entry into force of a new interest rate cap, the most expensive compound loan on the market offers savings of over USD 1,000 over the same loan period. The cheaper loan offered by the competitive situation in the loan market offers even greater savings by reducing the loan term by half a year.
Remember these when applying for a compound loan
· Don’t borrow more than you need. Loan consolidation is meant to ease your debt situation. It is not intended to extend a new loan alongside existing loans.
· Pay off your existing loans at once with a new loan. Combining loans is only useful if you pay off all your existing loans in one go. You will not be relieved if you only pay part of your existing loans with a compound loan.
· Calculate your loan cost carefully. By carefully reviewing your loan costs, you know what kind of combination loan is best for you. Not all compound loans automatically bring savings, and you may roll over before you find a loan that can save you money.
Always compete for compound loans. Combined loans should compete with all other loans. Loan comparison is your best chance to find the most suitable and affordable loan for your own solvency.