How to avoid excessive debt?
Although non-bank loans have become a very popular product among people, many people make the mistake of using payday loans. They have no basic knowledge of responsible lending, which leads to even a spiral of debt. All you need to do is learn a few tips to avoid this situation and let us borrow money wisely.
Convert the total cost of payday pay
First, before deciding to take a payday loan, first calculate its total cost. Many people opt for a loan with the lowest interest rate, forgetting about hidden fees or compulsory insurance. A much better indicator is the APRC (Real Annual Interest Rate), which includes all additional expenses. Loan companies provide information on the APRC amount on their websites.
Home budget analysis
The second important thing before using the payday loan is to analyze your home income. You should check whether the additional payments in the form of a loan installment will significantly affect your home budget.
Agreement with a loan company
The third issue regarding loans is the contract. Every potential customer should read it carefully. If he is not sure whether the contract is in line with the offer or what the consultant said, he should not sign it. And he must clear up all doubts with the company where he wants to borrow money.
Do not borrow any more
In addition, a person in debt who is unable to pay back the loan should not incur another obligation to settle the previous one. This behavior leads to a debt spiral. It is the client’s responsibility in the event of financial slips to consult the company where he decided to take out a loan. Non-bank institutions want the money borrowed to be returned. Therefore, they help clients repay loans, e.g. extending the repayment period and reducing the amount of payday installments.
What to do once you’ve got into a debt spiral?
A client who is over-indebted should primarily take responsibility for his finances and contact the loan company. Avoiding contact with a non-bank institution can lead to unpleasant consequences. Costs for prompts are added to the client’s account, which will increase the debt. Only through the cooperation of the debtor with a non-bank institution can you slowly get out of the debt loop. Remember to always choose proven loan companies.
Customer financial liquidity is a key element. In a situation where the client is unable to pay his debts, he should immediately report to a non-bank institution, which may propose refinancing of the loan. This solution will allow the consumer to leave the spiral of debt. Only a client who cooperates with a loan company can count on continued use of financial market services.