14 Tips: Personal Loans to Pay Off Debt
Let’s say you are heavily in debt. You can hardly pay everything you owe. Besides, it is very boring to keep an eye on the payment date, not to answer the phone so as not to get more anxious and not to have money to go out on Friday nights. Personal loans to pay off debts could help you.
It would be great to lower your monthly payments, have only one debt and have money to live on again.
What NOT to do?
- First of all, don’t get desperate and make mistakes like using your credit card to take out cash. Expensive debt like this increases the problem. It triples it, undoubtedly. This should be the last resort. You would assume interest from the moment the cashier hands you the money at very high rates. It may seem like an easy way out, but in a couple of months, you will realize that it will not be easy for you to pay off this new debt.
- Use extra-bank loans: They are not safe and they are very expensive.
- Taking the first offer you get for a loan without checking the cost, the rate, without comparing.
- Ask for a loan without knowing how much you need: You will pay interest for money you did not need.
- Not having a clear idea of your payment capacity: pretending to pay the loan in a short period of time so as not to pay interest is a good idea. But, of course, you must have enough money to pay. Otherwise, you will be in default, which is very costly.
- Digging a hole to cover another one. Experts say this is the real cause of the problem. Lending to pay and then lending again is very dangerous. You have to cut your losses.
- Not taking the moment seriously and not learning a little about personal finance.
How to pay off debt?
- The first thing is to come up with a plan: It’s not just about paying off a few debts. It’s not about taking out a loan. It’s about your financial health. Surely, by putting your numbers in order, you will put your ideas in order.
- Keep up with your commitments: It sounds obnoxious, but it’s necessary. Don’t stop paying your utility bills, cell phone bills, credit. Being in arrears with your bank or reported to the credit bureau makes it difficult to get out of debt.
- Apply for a mortgage loan: Do you have a property free of encumbrances? It is time to make it work for you. This type of credit is very convenient because of the low rates. The expenses of the credit will be compensated with the rate.
- Refinance your debt with the bank: It is likely that you do not need a new loan; your bank could refinance the credits you have with it.
- Learning about personal finance many times, we fall into the credit whirlpool because we do not know key issues such as compound interest or risk. A good advisor will teach you.
- Advisor: It is recommended that an advisor accompanies you in the process. Getting out of debt requires planning and knowing the market. That is the opportunity to make the best deal.
- When you have the resources, pay the capital of your debts. The interests of the credits are higher than the yields in deposits or savings accounts. You will make a better deal decreasing the debt (never advance installments, pay to capital)
I am Nikesh Mehta, owner and writer of this site.
I’m an analytics and digital marketing professional and also love writing on finance and technology industry during my spare time. I’ve done online course in Financial Markets and Investment Strategy from Indian School of Business. I can be reached at [email protected] or LinkedIn profile.