Life goes up and life goes down. You want so much but sometimes it gets too much.

There are many people who are very active and keep a high pace throughout their lives. A good way to keep a high pace and have a lot of fun is to borrow money. It is very easy to take out a private loan and you can use the money for anything.

Many people take private loans to finance studies

bank

Parties, car purchases, holidays, appliances, electronics, shopping, beauty operations and much more. Many also take private loans to cover up when there is no money at the end of the month.

It is very easy to take out private loans and there are thousands of companies that issue private loans. It is enough that you go to a company site and fill in some basic information so you can get the money into your account within minutes.

It is so easy to take a private loan and it is so inviting to get the money into your account exactly when you need it which can make the temptation great to immediately take a private loan when you need money quickly and then it rolls on. As soon as you are in need of money you take out a loan. Your loans may not be that big, but they grow quickly and for every small loan you take, the loan grows. It is clear that you also pay off the loans one by one, it disappears, but considering why you started taking out loans, it can easily be that you actually take more new loans than you pay off old loans.

Your debt grows and because you have many small loans, the effective interest rate is very high. The effective interest rate is the nominal interest rate plus the administrative fees you pay and since each loan has administrative fees at approximately the same level, the administrative fees will constitute a higher proportion of the cost of small loans compared to large loans. This is why small loans have such high effective interest rates compared to large loans.

Finally, your burden of payments can be difficult to manage

You are struggling but here and there you cannot make the payments. When you do not manage your payments, the interest rate is often added to your debt, which means that the debt grows and thus the interest cost becomes even higher. If you find out even more, there will be reminder fees and other costs that will be incurred when you do not pay properly. The vicious circle grows in strength and you feel even more overwhelmed and unable to clear up your situation.

You probably think at first that you will be able to clear this up all by yourself but you have in the beginning put yourself in this situation because you are unable to manage your finances so the chances that you will clear up this situation may not be great after all . But it takes time before you realize you need help. Your situation will probably get worse before it gets better. Late on cider, however, you will hopefully find that you need help to clear the situation.

There are various ways to get help when you are in a debt trap. You can understand, and should, first turn to people in your neighborhood such as parents, siblings, your partner and close friends and tell them what your situation looks like and ask them for advice and support on how to deal with this. . It is not uncommon for your close relatives to set up and redeem your loans in exchange for you then paying off the loans to them. However, this is not an optimal solution as you will then become debt free and can again apply for new sms loans when it is a nuisance. Given your past behavior, it is not entirely unlikely that you will, and your situation will be even worse.

After consulting your friends, it’s time for the tough meetings

After consulting your friends, it

First off are your lenders. You should contact the bank and other credit institutions where you borrowed and fully explain to them that it has been run. You can’t do this anymore. You have to get relief.

The first thing you, together with your lenders, and you probably have several different lenders, can do is to get a complete picture of what your debt situation looks like. How many loans do you have, what is the maturity and what are the effective interest rates. It is almost obvious that you will see here that you pay a much higher effective interest rate than you could. It is true that many small loans with administrative fees provide an overall high effective interest rate. One thing you can do in this situation is to start a discussion with the lender you feel most confident about whether to collect all your small loans into one larger loan.

This is precisely called “collecting the loans”. This means that your lender will redeem all your small loans in exchange for a larger loan. The advantage of this is that you get a much better overview and you also certainly get the effective interest rate down, which saves you money here already. However, you should now have one thing ready for you and that is that you should not use the saved money to take out new loans but instead to repay your new debt. This means that you now channel your income towards lowering your debt instead of paying high effective interest rates. You must make this clear to your lender. But probably they are the ones who will make this clear to you right from the start.

Leave a comment

Your email address will not be published. Required fields are marked *