Consolidate or Renew

August 01, 2019

Reorganizing your finances is always a healthy decision. Doing so helps you adjust your expenses and ensures that your savings and retirement plans are aligned with your reality. There are two tools to make this happen: debt consolidation and renewal. Here is a quick course where you can learn about their uses and benefits.

Both tools are very useful and available to you. It is important to know that, even if they sound similar, debt consolidation and renewal are not the same things. There is a basic and very important difference between them: they were created for different purposes.

Consolidation is when you intend to pay several debts in a single payment. Renewal is when you replace an existing loan with another one that will work in your favor: giving you more time to pay and a lower monthly payment.

The ABCs of consolidation

This could be your scenario: You are paying several bank-issued or store-issued credit cards and maybe a personal loan you took out for home improvements or any other purpose. Bills with different due dates arrive in your mailbox every month. But what happens if one is lost and you miss the payment date? Your credit will take a hit. A debt consolidation loan could help you get better organized by bringing all your debts together in a single monthly payment.

How does it work? You apply for a loan with a fixed interest1 and, depending on the loan amount, you are approved for consolidation. With the approved money you can pay some or all of your debts. However, that doesn’t mean your debts have disappeared but that now you’ll be making a single monthly payment in an easier and more organized way.

And beyond simplifying your life, consolidating can save you money. The fixed interest rate you’ll get could be lower than that on your store credit cards and other credit lines. Depending on the loan amount, the interest rate and the time selected to pay off the loan, you could end up with a single payment that is actually lower when compared to the sum of all your debt payments prior to consolidation. Having a single loan allows you to program yourself to get rid of debt faster. In addition, with a Popular consolidation loan you have the option of 0 payments for the first 90 days2. The money you save can then be used to beef up your emergency or retirement fund, for example.

Loan renewal

In these challenging economy times, renewal stands out as a financial strategy that should be explored when you have an individual loan and need more favorable terms to make your payments. The good news: you can opt for renewal when you deem it necessary.

Imagine this second scenario: You are paying your loan on time and as a result your credit profile has improved. Don’t you think you should take advantage of this and pay a lower interest rate than the one you got when you initially applied for the loan or maybe lower your monthly payment or get additional money? This is possible with a renewal loan1 that offers a better interest rate for your upcoming payments.

At Popular, we have a team of experts who will offer guidance so you can decide what’s most convenient for you. Call 787.294.2572 or visit: Take control of your finances today.

Product offered by Banco Popular de Puerto Rico. 1 Subject to credit approval. 2 You have the option of starting to pay your loan up to 90 days after disbursement. However, this does not constitute a waiver of the interest accrued during this period. If the applicant is a covered debtor according to the definitions of the Military Lending Act, the availability of this option is subject to the provisions of said law.

The information and general descriptions found in this article are designed to help you understand some of the factors that you should generally consider when evaluating the appropriateness of any strategy or investment in your retirement plan. Any description included is for informational and educational purposes and for independent consideration only; it is not meant to be considered or regarded as advice or as a suggestion to perform (or refrain from performing) any particular action. By providing this information, we assume that you are capable of evaluating this information and the general descriptions found here to exercise your independent judgment. This material was prepared for informational purposes only and should not be regarded as advice of any kind. Banco Popular de Puerto Rico, its subsidiaries and/or affiliates do not engage in providing legal, accounting or tax advisory services. If legal, accounting or tax advisory services are required, you should seek the services of a competent professional. Investment products are not insured by the FDIC, are not deposits or obligations of, nor are they guaranteed by Banco Popular, its subsidiaries or affiliates, and may lose value. Insurance products are not insured by the FDIC or by any government agency, are not deposits or obligations of, nor are they guaranteed by Banco Popular, its subsidiaries or affiliates. Some insurance products may lose value.