Consolidation is a change in the validity period of already issued loans, either increasing (usually) or decreasing. It involves easing the terms of debt repayment in the form of deferred payments and repayments. It is possible to combine consolidation with conversion.

Unification of loans is the combination of several loans into one, when bonds of previously issued loans are exchanged for bonds of a new loan. The goal is to reduce the number of types of securities in circulation at the same time, which simplifies work and reduces the state's debt servicing costs. The unification of government loans is usually carried out together with consolidation, but can also be carried out outside of it.

In some cases, the government can exchange bonds using a regressive ratio, that is, when several previously issued bonds are equal to one new bond, which relieves the government of the need to make payments on bonds in full money (interest payments and (or) redemption of bonds), previously placed in a currency that was depreciated at the time of settlement.

Deferment of loan repayment differs from consolidation in that in this case not only the repayment period is postponed, but, as a rule, the payment of income is stopped.

Conversion, consolidation, unification of government loans and exchange of government bonds are usually carried out only in relation to domestic loans. As for deferring the repayment of obligations, this measure is also possible in relation to external debt. Deferment of repayment of an external loan, as a rule, is carried out in agreement with creditors, and this operation does not necessarily involve the suspension of interest payments on the loan.

Cancellation of public debt refers to the complete renunciation of the state's obligations under issued loans.

The main task of managing Russia's public debt is to change the debt strategy and move from a policy of deferring payments to a policy of debt reduction. Due to the current circumstances, this applies to the greatest extent to external debt. And here it is advisable to turn to the timely world experience of financial conversion methods for settling external debt, as the most flexible and adequate to the current state and credit capabilities of Russia.

The financial mechanism of the conversion scheme consists of eliminating part of the external debt by exchanging it for national assets - national currency, bonds, shares, goods, financial assets, etc. The following options may be the most acceptable for Russia.

Debt in exchange for exports. This does not mean export of raw materials, but export of finished products. This option allows you to support competitive production in the country, develop exports, develop new markets, and therefore preserve jobs, ensure the receipt of taxes and repayment of debts, as well as financing investments. It is important to support industries that have significant export potential (space, aluminum, aviation industry, etc.), which are already producing products that meet international standards and can contribute to the growth of the economy as a whole.

Debt in exchange for property. This option is carried out, as a rule, within the framework of a privatization program, and also involves the exchange of debt obligations for shares of privatized enterprises and the attraction of strategic investors. In this case, it is important to assess the value of domestic enterprises in accordance with world market standards, and the exchange of debt for shares should be carried out at a rate favorable to Russia. It is also important to determine the share of shares (company) in ownership during debt conversion.

Debt in exchange for taxes. In this case, it is proposed to legislatively establish such tax benefits for investors - holders of external debt, which would encourage them to invest. Permission for conversion should be granted only when making investments that are important for the Russian economy. In this case, the external debt will be repaid using future income.

Payment of interest payments on external public debt in local currency. This option is used in world practice in some cases. Payments are made at an attractive rate for creditors, but money is transferred for interest payments to special investment accounts in domestic banks, and funds from these accounts can only be used to make direct investments in the debtor's economy. All other manipulations with such funds and income from these investments can be carried out only after the expiration of the period established in the conversion agreement (at least a year later).

Debt for cash. Involves repurchasing debt at a discount on the secondary market for external debt obligations. In this case, the nominal debt is reduced and there are savings on future interest payments. The procedure for this operation is as follows: the government appoints an agent with sufficient experience in the purchase and sale of foreign debts (usually a large commercial bank) and sets a discount to the face value of the debt, according to which it is ready to buy back the debts purchased by the agent from the agent.

Debt restructuring. This method of debt management is very common in modern conditions. Restructuring refers to the repayment of debt obligations with the simultaneous implementation of borrowings (assuming other debt obligations) in the amount of repaid debt obligations with the establishment of other conditions for servicing debts and the timing of their repayment. Debt restructuring can be carried out with a partial write-off (reduction) of the principal amount.

Many of the described techniques were used in bringing Russia out of the 1998 default. In particular, we can mention such methods as: restructuring of bond loans into bonds with a later maturity; negotiating with creditors to defer payments; use of various offset schemes to reduce loan debt; attracting bank loans for payments on bonds; acceptance of bonds for tax payments, in exchange for housing certificates, etc.; repurchase of your obligations at a discount; early redemption of its obligations.

Taking advantage of the low level of prices for their obligations and the growth of their budget revenues, the procedure for repurchasing Eurobonds was carried out by Moscow and St. Petersburg. So, in 1999-2000. Moscow bought back Eurobonds due in 2000 in the amount of $220 million, St. Petersburg also made an early redemption of its Eurobonds in the amount of $80 million, and in 2001 – in the amount of $100 million.

Russian legislation, in particular the Budget Code of the Russian Federation, provides for a number of organizational methods for managing public debt. The right to carry out state external borrowings of the Russian Federation and conclude agreements on the provision of state guarantees, guarantee agreements for other borrowers to attract external credits (loans) belongs to the Russian Federation or on its behalf - to the Government of the Russian Federation or a federal executive body authorized by the Government of the Russian Federation. The subjects of the Russian Federation, whose budgets did not receive financial assistance to equalize the level of budgetary security, initially had the right to carry out state external borrowings. At the moment, a ban on external borrowing has been introduced for the constituent entities of the Russian Federation (for municipalities they were not provided for) - the corresponding amendment to the Budget Code came into force on January 1, 2002. External borrowing is allowed only to regions that already have external debt, for its refinancing within the limits financial year.

Large financial institutions refuse to issue unsecured loans so as not to burden themselves with late payments. The risk of non-repayment of borrowed funds is closely related to the lending procedure, whether issuing a long-term mortgage, consumer loan, or quick loan. Increasing interest rates can protect the interests of the lender. In this case, there is a guarantee of making a profit even if part of the debt obligations is considered bad.

An increase in interest payments leads to a decrease in the borrower's ability to pay. Clients who are not financially conscious may fall into a debt trap, from which only a few will be able to get out. Specialized services provided by lenders in order to reduce the payment burden on clients can help the borrower cope with debts. We are talking about consolidation, restructuring and refinancing of debt obligations. The initiator of each procedure can be the client himself or a financial institution.

We bring to your attention 4 loan products with favorable conditions for combining several loans:

Interest rate
from 10.99%

Term
lending
up to 60 months

Sum
up to 2 million rubles

Refinancing up to 5 loans

Credit limit
up to 500 thousand rubles

Interest-free period
100 days

Cost per year
from 1190 rub.

Repays credit cards from other banks

Credit limit
up to 300 thousand rubles

Interest-free period
up to 365 days

Cost per year
590 rub.

Repayment of other loans

Interest rate
from 11.99%

Term
lending
up to 60 months

Sum
up to 1.5 million rubles

Loan refinancing

What is debt consolidation?

Borrowers who simultaneously take out several loans must ensure conditions for the timely repayment of all debt obligations. To simplify this procedure, consolidation is used, that is, combining loans. Instead of making several small payments for which banks charge a commission, the customer makes one regular transaction.

Benefits of debt consolidation:

1. Changing the terms of the original transactions.
2. Reducing the number of delays.
3. Reducing the cost of servicing a loan, including the waiver of numerous commissions.
4. Possibility to unify mandatory payments.
5. Simplifying the procedure for carrying out regular transactions.
6. Improving your credit history and increasing your credit rating.

In the process of replacing multiple debt obligations with a consolidated loan, changes can also be made to the contractual relationship between the lender and the borrower. Financial institutions are ready to accommodate the borrower halfway, so you should take advantage of the situation by individually developing a payment calendar. Borrowers even have the opportunity to agree with the lender on installment payments. This option is ideal for clients with seasonal earnings and temporary financial difficulties.

Sometimes consolidation is provided as a billable service. The client pays for such a service by paying interest. For example, when consolidating debts, the highest rate, or maximum commission payment, is used. This method is only suitable for consolidating loans that have almost identical payment terms. Paying off a mortgage under the terms of an express loan is simply unprofitable for the borrower.

Reducing costs through debt consolidation

Consolidation will help reduce the costs associated with debt repayment. The loan will have to be repaid in any case, but after consolidating small debts into one large transaction, commission payments will be noticeably reduced. Some lenders also offer payments at a reduced interest rate.

There are two saving methods:

1. Managing interest rate risk by switching to an affordable fixed loan rate.
2. Changing the initial time profile for debt repayment, including the introduction of a grace period and the creation of a payment calendar taking into account the financial capabilities of the borrower.

The consolidation procedure will relieve the client of numerous loan servicing fees, which are usually charged after specific transactions are completed. The debt management process is further simplified. Instead of making payments into the checking accounts of multiple lenders, borrowers commit to making one consolidated payment on a regular basis.

A client who is poorly versed in banking is less likely to miss another payment. As practice shows, small delays of up to 7 days are often caused by the simple inattention of payers who confuse the payment dates of received loans. As a result, you can access another benefit of consolidation - an improved credit score.

Receipt and payment of consolidated debts

The opportunity to consolidate debt obligations should be used wisely. The service was created in order to get rid of small debts, turning them into one large obligation to the creditor. The consolidation procedure is not intended to increase the borrower’s expenses, since the financial institution takes into account the interests of the client, allowing the debt repayment process to be reasonably adjusted to current needs.

Before you submit your loan for consolidation, you should make sure that the procedure makes sense. To do this, you need to find out how long it will take to pay off the combined debts. You will also have to ask a representative of the financial institution about the presence of hidden fees and commissions, the dissemination of information about which some lenders deliberately ignore.

To repay a consolidated loan you will have to:

1. Determine the optimal time to make payments. Typically, lenders recommend stopping at the 25th of each month. The client always has the opportunity to make payment ahead of schedule.
2. Compare the level of financial burden before and after the consolidation procedure. If, after concluding an updated transaction, the borrower’s solvency decreases, such an idea should be abandoned.
3. Make payments on time, thereby avoiding penalties and deterioration of your credit history.
4. Reduce overall expenses by additionally drawing up a family or personal budget for the reporting period.
5. Refuse to receive additional loans for the duration of the current agreement.

Unorganized borrowers who forget about loan repayments can install a utility on their phone or personal computer that will notify them when the next payment date is approaching. Some lenders go further. They personally inform the client about the next payment via SMS, emails and calls to the financial phone number (specified in the contract). This is done unobtrusively and solely for information purposes, so you should not equate such messages with the work of collection companies.

You can discuss the level of interest payments with an employee of a financial institution on an individual basis. To calculate efficiency, simply compare the monthly payments on individual loans with payments on a loan after consolidation, which includes a modified debt repayment plan. Sometimes it is also necessary to pay a symbolic amount for connecting the consolidation service, so all additional payments will have to be taken into account at the planning stage of the updated transaction.

Most people make every effort to pay off their debt in the shortest possible time, but more often than not it takes a while, and then the next holiday comes when new purchases are made and more are taken out. borrowed money.

In the end, the payment for purchases made before increases by an order of magnitude more than their original cost, and the person begins to gnaw at his own conscience for his connivance towards the family budget.

But there is no need to get depressed when in the form of numerous loans. Today there is not a single way to correct the plight of your card. But the most productive of all ways is to combine all debts into one personal microcredit.

Debt consolidation - a way out of financial impasse?

Debt integration will help you eliminate problems in your wallet with constant microloans, adding up the balances on all credit cards into one easy payment. You can also count on a reduction in the overall interest rate. In such cases, microfinance organizations meet their clients halfway and do everything possible to quickly repay your debt.

Personal loans, reportedly MFC, are more favorable in terms of conditions when compared with credit cards. The lion's share of borrowers microfinance organizations claim that by taking advantage of consolidation, they received a major advantage - their rate decreased by about 30% compared to the old one.

In addition, debt consolidation increases the client's credit rating. Borrowers MFO, who combined all their debts into one personal loan, thereby improving their credit history.

Who can't benefit from consolidating debts into a personal loan?

Please note that consolidation is not suitable for all categories of borrowers. It should be remembered that consolidation only provides convenience for the borrower in repayment (including online-regime) of debt, but does not eliminate it. This advantage of having just one loan gives a person a dubious sense of peace of mind. The main thing is not to relax, but to focus on quickly paying off your debt.

Debt integration rightfully remains a compromise solution to problems for most borrowers, who in the long run can save thousands and thereby improve their own material well-being.

In this case, a mechanism called loan consolidation comes to the rescue. To manage money effectively, you need to be able to correctly use this financial instrument. Any debt obligations can be transformed if the borrower is given the right to do so in the relevant agreement.
Do not confuse consolidation - combining credit obligations, with refinancing - obtaining a new loan with which the client covers previous obligations.

Let’s assume that the client has a large number of different loans, both small ones, taken for the purchase of household appliances or overhead expenses, and large ones, spent on training, repairs, travel, medical care, and in a fairly large number of banks. After all, one bank may not lend large sums of money at once.

Loan consolidation should be carried out when all the components of this mosaic coincide. You need to understand that not every bank today undertakes such an operation. After all, sometimes a credit history is so burdened with penalties and interest that even specialists will not undertake to untangle this tangle.

The following facts speak in favor of consolidation.

1. All current obligations of the borrower are subject to consolidation. There are banks that consolidate selective loans. If such a calculation is beneficial to the client, then you can agree to partial consolidation, which will alleviate the debt.
2. During the consolidation process, one bank becomes the new lender for the client, which is very convenient. Now you will not need to remember all the terms and other conditions of all loan agreements. There will be one consolidated loan agreement. Instead of a large number of small amounts, you will now have to pay one large one once a month.
3. The terms of a consolidated loan are selected to be the most favorable in comparison with the aggregate terms for all previously assumed obligations. This will need to be taken care of by the client himself. Carefully read the new agreement, recalculate all loan amounts, conditions for early repayment, and so on.
4. Often the bank itself offers the client to consolidate all his debts, putting forward the most favorable conditions for his future loan agreement (flexible payment schedule, payment terms, reduced interest rates, reducing the amount of debt by increasing the amount of overpayment).
5. The advantage of this mechanism is that the consolidated loan will release previous obligations from collateral. At the same time, it is necessary to understand that the bank will require new guarantees for new loan obligations. In this case, you need to be prepared to provide new, equivalent and liquid collateral. Although there are often cases when a new loan was provided without collateral. This depends on the borrower's credit history and other factors.

The following facts speak against consolidation.

1. Only professionals can understand all the intricacies of this process. When concluding a new agreement, it is necessary to analyze all the client’s existing loan agreements, draw conclusions, outline a diagram and sequence of actions, write the required requests to banks, and attract the necessary credit brokers. This process may take a long time. At a certain point, it will be necessary to correctly and legally record all credit debts, issue written reconciliations, assignments and agreements with the credit commissions of all banks participating in the consolidation, and negotiate debts. It is precisely because of these difficulties, and often because of the emerging need to pay additional commissions for these services to brokers or a bank, that it becomes impractical to carry out this operation.
2. Some banks will not agree to consolidate loans if at least one of them has been overdue or fined. In this case, the client’s reputation must be impeccable. Before receiving a consolidated loan, you will need to request a personal report from the Credit History Bureau.
3. Cash is excluded from consolidation. This is not even a minus, just note that the new lender will have to make timely cashless payments and close existing loan agreements. This is what the client will need to check, making sure that he has been fully cleared of previous obligations. If a new loan is proposed to be issued in cash, and the client himself takes it to the banks, then this is called refinancing and the responsibility for it is assumed entirely by the client.

Despite all the disadvantages, for some consumers, loan consolidation can be a lifesaver that will help you deal with your debts and get rid of the risks of delinquency and save money. It is necessary to understand that consolidation will not get rid of debts, but it will certainly help to organize and control existing loans.

The unification of government loans is usually carried out together with consolidation, but can also be carried out outside of it. Unification of loans is the combination of several loans into one, when bonds of previously issued loans are exchanged for bonds of a new loan. This measure provides for a reduction in the number of types of securities traded simultaneously, which simplifies work and reduces government costs

and according to the state credit system. The unification of loans was carried out in 1930: simultaneously with the release of the “Five-Year Plan - in Four Years” loan, bonds for loans for industrialization and strengthening the peasant economy were exchanged for its bonds.

In exceptional cases, the government may exchange bonds using a regressive ratio, i.e. when several previously issued bonds are equal to one new bond. For example, such an exchange was carried out in the post-war period in order to remove wartime loans from bonds. Exchange of bonds at a regressive ratio relieves the state of the need to pay interest and repayments in full money on bonds sold by the state for depreciated wartime currency.

The deferment of repayment of a loan or all previously issued loans is carried out in conditions where further active development of operations to issue new loans is not financially effective for the state. This happens at a time when the government has already issued too many loans and the terms of their issue were not sufficiently favorable for the state. In such cases, most of the proceeds from the sale of new loan bonds are used to pay interest and repayments on previously issued loans. To break this vicious circle, the government announces a deferment of loan repayments, which differs from consolidation in that the deferment not only postpones the repayment period, but also stops paying income. During loan consolidation, bondholders continue to receive their income on them.

In 1957, our country decided to stop issuing loans distributed among the population by subscription and to defer the repayment of previously issued loans for 20 years. The actual reason for this event was the deadlock in the field of state credit, caused by the unpopularity among the population of the so-called mass loans placed by subscription. The government was aware that this practice had to be abandoned, but could not count on receiving new loans to refinance the public debt. I had to defer loan repayments.

Conversion, consolidation, unification of government loans and exchange of government bonds are usually carried out only in relation to domestic loans. As for deferring the repayment of obligations, this measure is also possible in relation to external debt. Deferment of repayment of external loans is usually carried out in agreement with creditors. At the same time, deferment of debt repayment may not entail a suspension of interest payments on it.

The cancellation of public debt is understood as a measure as a result of which the state completely renounces its obligations on issued loans (domestic, external or all public debt). Cancellation of government securities can be carried out for two reasons. Firstly, the cancellation of public debt is announced in the event of the financial insolvency of the state, i.e. his bankruptcy. Secondly, the cancellation of debt may be a consequence of the coming to power of new political forces that, for certain reasons, refuse to recognize the financial obligations of the previous authorities. Thus, in January 1918, the Government of the RSFSR canceled all pre-revolutionary internal and external loans. The Soviet government did not recognize the financial obligations of the tsarist administration and the Provisional Government, which used borrowed funds mainly to prepare for war and conduct combat operations, as well as to suppress the revolutionary movement (at present, the central government has recognized part of the external pre-revolutionary debt).

An important area of ​​public debt management is related to the determination of conditions and the issuance of new loans. The success of new loans can be ensured only if the situation in the economy, the state of money circulation, the level of profitability and terms of existing loans, the benefits provided to creditors and many other factors are correctly taken into account.

The production, storage and distribution of government loan bonds are entrusted to the relevant departments of the Ministry of Finance, the sale of government securities is entrusted to the banking system. Banks freely sell and buy government bonds on all working days, except for the period from the day of the winning draws to the day of receiving the official table. On the eve of the draw, existing bonds are sealed; upon receipt of the official winnings table, they are checked by a special commission. Winning bonds are withdrawn from further circulation, and the winnings on them are credited to budget revenue. The next day, operations for the purchase and sale of bonds of winning loans are resumed. Transactions with interest-bearing bonds and treasury bills are carried out continuously.

External bond loans on foreign money markets are placed, as a rule, by banking consortia on behalf of the borrowing state. They charge a commission for this service. Intergovernmental loans are usually non-bonded. All conditions of intergovernmental loans are fixed in special agreements (interest level, currency of loan provision and repayment, other conditions).

2.3 Foreign experience in public debt management

In modern conditions, a common cause for many countries for budget deficits and the associated increase in public debt is considered to be unreasonable economic policies, which lead to an excessively high level of social financial obligations. A similar situation is developing in Russia, which makes the diverse experience of managing public debt in Western countries useful for us.

One of the approaches to managing public debt is to agree on a common policy regarding acceptable limits for its growth. As follows from the practice of most countries, debt of about 50-70% of GDP usually does not cause concern. In the 11 countries that were the first to provide the conditions for joining the European Monetary Union, public debt is generally at a level of over 60% of GDP, incl. Finland – 56, France – 58, Germany – 61, Spain – 69, in Belgium and Italy – 122% each; At the same time, the last two countries have pledged to halve their debt - Belgium by 2011 and Italy by 2016. In the United States, the federal government's debt is currently over 5.3 trillion. dollars, or about 70% of GDP. In the context of a long-term generally favorable state of the economy and the state budget, it is planned to achieve an annual excess of federal revenues over expenses at the level of one percent of GDP by the middle of the next decade. This means using the budget surplus to pay off the debt. It is believed that this will have a downward effect on long-term interest rates and thereby increase private investment, productivity and economic growth.

Similar articles