Consolidate or Renew

November 13, 2017

Reorganizing your finances is always a healthy decision. Not sure where to start? We’ll give you a crash course on two tools available to you: debt consolidation and renewal.

Although they may sound similar, they aren’t the same thing. There is a basic, significant difference between consolidating and renewing that you should recognize, because they’re created for different purposes. Consolidation is for someone who wants to pay off several debts with a single payment, while renewal is the replacement of an existing loan with another loan that could benefit you with more time to pay it and a lower monthly payment.

Lesson 1: The ABCs of Consolidation

This may be your scenario: You’re paying off bank or department-store credit cards and that personal loan you took out for home improvements or some other purpose, and every month the bills come in with different payment dates. It wouldn’t be surprising if you overlooked one of them and failed to make your payments on time, which will impact adversely your credit rating. A debt-consolidation loan would help you get organized better so you can group all those debts into one single monthly payment.

How does it work? You apply for a loan with a fixed rate of interest1, and depending on the loan amount approved to consolidate, you could pay off some or all those individual debts. But that doesn’t mean that all your debts have gone away—what happens is that now you’re making just one monthly payment, which may be the easier and more organized way to pay what you owe.

Beyond the benefit of simplifying your life, consolidating can save you money. How? The fixed interest rate you’ll be getting may be lower than the rates you have now on your department-store credit cards and other lines of credit. Depending on the consolidation loan amount, interest and loan term, you could have a lower single payment compared to the sum of all the payments you had to pay before the consolidation.   With a single payment you’re programing yourself to get out from under those debts faster. And one more thing—with a consolidation loan from Banco Popular, you have the option of 0 payments for the first 90 days2.

Lesson 2: Renewal in Times of Crisis

In these economically challenging times, renewing stands out as a financial strategy to explore when you have a personal loan and you need more favorable terms to meet the payments. The good news is that you can get a renewal loan whenever you find it necessary.

Imagine this second scenario: Your payments on your personal loan are up to date, and therefore your credit rating has improved. Don’t you think you should take advantage of that and pay a lower interest rate than the one you got when you took out your loan? Maybe lower your monthly payment? Or maybe obtain additional cash? That’s possible with a renewal loan1 that will offer you a better interest rate for your future payments.

So, in these times of financial instability, there are options for managing your situation, taking life easier, and having a healthier wallet. Both alternatives can be used for managing your financial commitments.

At Banco Popular, we have experts who’ll provide you with the financial information you need for making the best decision for your situation. Call 787-294-2572 and take control of your finances right now. Or you can also go to popular.com/loanapplication.

 

 

1Subject to credit approval. 2You have the option to begin payments on your loan up to 90 days after disbursement of the loan amount. This, however, does not constitute a waiver of the interest accumulated during that period. If the applicant is a debtor covered by the definitions of the Military Lending Act, the availability of this option is subject to the provisions of that law.

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