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How to choose the best consolidation loan is not as easy as it seems. The task is difficult because the current financial market abounds in various types of consolidation offers. We have a consolidation loan with mortgage and unsecured collateral. They are characterized by different parameters and requirements to which attention should be paid before making a decision about the selection of an offer. In this article, I will try to identify and highlight the criteria that you must follow when comparing individual proposals. The right choice is crucial, for instance because of costs, and remember that by signing a consolidation loan agreement, you are associated with the bank for many years.

How to choose the best consolidation loan?

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The payday loan consolidation directory enables the combination of all loan liabilities held to one with a lower installment. The essence of its operation is based on lowering the installment after consolidation due to a longer financing period.

By consolidating loans in addition to repayment, you can also get an additional pool of money for any purpose depending on the offer and needs. Personally, I consider this opportunity to be unprofitable and I advise against using it. By choosing additional cash for the consolidation loan, you deny the essence of consolidation. You do not take full advantage of the load reduction possibilities you receive and in total, you reduce them a little. Let’s get to the bottom line, or how to choose the best consolidation loan.

Budget deficiencies impulse for action

Banks at every step tempt us with more and more attractive offers. At every step, provide us with a low installment or the uniqueness of the offer. As a result, we are more and more willing to get into debt. We fulfill our dreams of living, home, car, and exotic holidays on credit. We forget that each subsequent commitment that we incur reduces our creditworthiness. We also reduce the pool of free funds that we have after paying our monthly installments. In this situation, even a small financial stumble is enough to make our home budget crackle at the seams. Usually, this is the moment when we start looking for a solution that allows us to get out of this uncomfortable situation. The solution is, of course, the consolidation of the loans we own. However, like a boomerang, the question “how to choose the best consolidation loan?” Returns to us. “Where to start? How to proceed.

Criteria to follow in order to select the best consolidation loan

To start with the criteria, you should first define the types of consolidation loans available. It is important to illustrate the differences between them and the possible ways of using them.

Types of consolidation loans

There are two types of consolidation loans on the financial market:

  1. Cash consolidation loan (without mortgage security)

It is granted without collateral, usually, for an amount not exceeding € 200,000, we will receive it for a shorter period (not longer than 120 months). A higher rate of interest, lower amounts available and significantly shorter financing time differ from a mortgage-backed loan. In its case, the APR, depending on the offer, ranges from about 10% to 20%. Its advantage is that there is no need to establish collateral on a real estate mortgage.

  1. Consolidation loan with mortgage security

It is awarded in much higher amounts than cash. Most often the limitation of its amount is only the value of the real estate constituting the collateral. Up to 90% of the value of the property is available for a longer period (up to 40 years). In his case, you can count on APY ranging from around 5% to a maximum of 10%.

Do you believe in internet comparison websites, opinions, and comments from Internet users?

If you want to choose the best consolidation loan, you must proceed carefully and judiciously. You can not focus on one offer, for example, your bank or recommended by your friends. In order to have a wide picture of the situation, possibilities, and conditions, you have to confront the proposals of several banks. You can use comparators or consolidation loan rankings to facilitate and speed up initial verification. However, you must remember that the comparison engines are not very accurate, but they give a picture of the costs of individual offers. After checking them, the next step should be to make a phone call to the banks whose offers you initially selected and verify the information obtained. In addition, it is also worth checking online reviews and comments of Internet users about individual offers. However, you must keep a good distance to these opinions. Recently, it has become very fashionable to rent hotters that issue negative feedback.

All sources of information are helpful, but you must rely on your common sense and verify them. If despite everything, you can not decide on an offer, you can always use the help of a professional financial advisor.

The amount of the loan and any collateral

The amount of credit you are interested in is an important criterion for assessing individual proposals. It defines whether you will be able to take advantage of an unsecured offer or whether it will be necessary and whether you will be able to apply for a loan at all. Up to 200,000 you can take advantage of a cash consolidation loan that does not require security. However, it is associated with higher costs and a shorter repayment period. With an amount of 200,000, you can, of course, opt for a cheaper mortgage loan, of course, if you have one. Over € 200,000, unfortunately, you have no choice and you can only use offers that require security.

From what amount of liabilities can they be consolidated?

The sum of the obligations you would like to pay off is important because it is a serious limitation. You must include this in your plans, due to the minimum amounts on which banks provide consolidation loans.

The minimum amounts on which consolidation loans are available depending on their type are:

  • cash without collateral – depending on the bank, the lower threshold starts from 5,000, but usually up to 10,000 euro,
  • with mortgage security – here the minimum amount is set much higher and starts from € 30,000.

Credit costs and side charges

To know how to choose the best consolidation loan you need to know which costs pay more attention to. Before you finally decide on a specific offer, you should look at the costs associated with its acquisition and further service. This is very important for the possibility of estimating the total consolidation basket to include the side costs (of which below).

When comparing various proposals, you must pay attention to:

  • the nominal interest rate,
  • commission
  • APR,
  • amount of installment,
  • the total cost of the loan.

The most important parameters from the above are the amount of the installment and the total cost (the total amount you pay for the entire duration of the contract, including all costs). These two parameters will tell you the most about how much consolidation in a given bank will actually cost. Why are these two parameters? Because banks are able to manipulate numbers very cleverly, often hiding costs, eg in insurance. Not everything that looks cheap on paper, it turns out to be in fact and in the final settlement.

Additional side costs

Another group of costs to pay attention to is:

  • in the case of security on a mortgage – the cost of insurance and property valuation, plus the cost of making an entry in the land and mortgage register,
  • the cost of loan insurance,
  • possible additional fees for early repayment of loans to be consolidated.

All the above-mentioned costs are equally important because they can have a significant impact on the total cost of servicing the liability.

Once you have chosen your offer, think about it and not overpay it does not unnecessarily prolong the repayment period

This is the right moment to further minimize costs by adjusting the loan amount to the repayment period.

Proper selection of these parameters is a key issue in maximizing the benefits of repaying liabilities. You must know and remember that with the extension of the repayment period, although the installment decreases, the total cost of the loan increases. Therefore, you need to carefully analyze your needs (the sum necessary to cover your debts), and at the same time the financial possibilities. If your goal is to regain creditworthiness or to relieve the household budget as much as possible, then extend the maximum repayment time. You will then get the lowest installment. However, if you want to maximize the benefits of consolidation (without looking at the amount of the installment and the level of the load) then you have to act differently. You have to adjust the repayment time in such a way as to shorten it to the shortest, at which you have the creditworthiness. In this case, you will save on interest you would have paid for a long time.

Additional cash for any purpose and costs?

When paying back old commitments, you need to consider the purposefulness of using the option of receiving additional cash after consolidation. You can receive a higher amount than the sum of consolidated liabilities and spend it freely. The undertaking of this step is only seemingly favorable, as the installment after consolidation with cash-in will be lower than the sum of installments before repayment. However, the total amount to be repaid and the amount of interest that you will cover will increase significantly. You must necessarily analyze your needs and think about the sense of choosing cash. It is important that you do not get caught behind your head when you look carefully at how much more you have to pay back during the entire loan period.


We hope that this article has explained, or at least it has clarified how to choose the best consolidation loan. In such a degree, you would be able to make the most of the opportunities offered by this solution and feel the benefits it provides. Consolidation of loans is a very beneficial solution for the majority of borrowers, almost free of defects, which is steadily gaining popularity among bank customers. It is worth and even you should think about this option when you feel that your current loans are weighing you down more and more.