Everyone will find a moment in their lives when they are forced to look for additional cash. Regardless of whether you borrow at a bank or a non-bank loan company, in some situations you will not be able to pay back your obligations. The unregulated ones will grow every day. The solution can be both a debt loan and a consolidation loan. Both will provide the opportunity to cover or reduce the debt, and consequently – a slow but systematic improvement of their situation.
How does a debt loan work?
The purpose of a debt loan, as the name implies, is to pay off debts. It will be primarily interested in those who have unpaid, overdue obligations and have probably already been entered in the register of debtors. The more so that the debt is also associated with negative entries in BIK and, as a consequence, low chances of getting an ordinary consumer loan or consolidation loan at the bank. In addition, unpaid debts will significantly reduce your creditworthiness, even if you do not receive the lowest level of earnings.
A debt loan can often be called a loan without KRD. When deciding to grant such a loan, the lender knows perfectly well what the financial situation of the person applying for financing is and yet he decides to grant a loan. Importantly, in non-bank practice, a debt loan is unlikely to function as a separate product within the meaning of the law. It is granted on the same terms as all others (of course, except for the existence of debt) and although it should ultimately be used to pay the arrears, the lender simply transfers the loan amount to the customer’s account and has no control over how it will eventually be spent.
Why not consolidation?
A debt loan is often also called a consolidation loan. In some respects they are similar to each other because they are intended to pay off liabilities. The main difference between the two products is that the consolidation loan is intended for the repayment of liabilities for which the repayment period has not yet expired. In such a situation, it is much easier to obtain a loan to pay off liabilities even at a bank or non-bank institution, but not intended for debtors. The basic requirement for applicants is that they have a good credit history and are not entered in any register of debtors.
A consolidation loan is not a loan intended for a specific purpose and must be used to repay liabilities of other institutions. For this reason, most often the money from the loan is transferred directly to other lenders with whom consolidated liabilities were incurred.
Where to look for debt loans?
Looking for a debt loan should not be difficult, because as we have already written, this is not a separate financial product. You can simply apply to one of the lenders who provides loans without KRD. However, most of them decide on payday loans, less often on installment loans, which are usually at a higher risk of loan default and loss of capital.
Debt installment loan
This is definitely a rarer type of loan, which is unlikely to be counted on in the largest installment loan brands. If these are not loans that require additional collateral (e.g. surety in Rapida Money), then the only way to get money to pay off debts can be a community loan. It is available, among others, from Fellow Finance. How can you benefit from it?
It is a loan granted not by this company (it only provides an environment favorable to loan transactions), but by private investors. Thanks to this, you don’t have to stick to the rigid conditions set by the company. The investor, knowing the debt of the applicant for the loan, can still decide to grant a loan. Fellow Finance is only an organizer here – it takes on all the formalities, provides a loan agreement, verifies applicants and sets a top-down loan framework.
Watch out for private debt loans!
Very often you can find private advertisements for granting debt relief loans up to several hundred thousand zlotys. Such loans are intended to “help” people who have arrears in BIK, KRD, and are struggling with bailiff seizure. In such situations, a person who decides to take out a private loan may face high initial fees or fees for analyzing the debtor’s situation and granting the loan. Sometimes such lenders also demand the issue of a promissory note – it should be added that it is usually very unfavorable – which may expose the borrower to loss of assets.