Have you ever thought of successfully paying your personal loans?
With a good credit history, borrowing money as a personal loan instead of using a credit card is advantageous. Interest rates can be as low as 5% depending on your credit history.
You can also pay it over two to five years of fixed monthly installments. This makes paying your debt easier.
But everyone has problems with finance at least once in their life. This makes payment of your borrowed money difficult to do. There’s sudden unemployment, health problems, medical bills, and homes losing value.
Failure to pay back loans, what are the consequences?
This could reach to the point where you don’t answer the call when you suspect a collection agency is calling. You leave the bills unopened and you stuff them in the drawer. You keep quiet to make debt collectors assume no one’s home when coming by.
The longer you don’t pay your loans, the higher the amount you need to pay because of the interest. Your banks and other debt collectors will pester you. Your credit score will drop. Worst-case scenario, you would have to face legal action. You could get lawsuits.
These scenarios will continue to stress you out and trigger fear and panic. You’ll get angry at the creditors who keep sending you bills. You’ll get angry at people and things you can blame, and you’ll get angry at yourself . But all these negative feelings shall perish once you pay off your loans.
So, what are the steps you can take?
- Start by making a list of all your debts
Having multiple loans with varying interest rates is confusing.
If you have many online cash loans with different interest rates. It can be confusing! So, borrowing money to cover all the loans into one with lower interest might be helpful. This is debt consolidation.
Once you’ve made everything manageable, note your total debt with the corresponding interest.
- Start by making a list of your income and expenses
Note how much you’re earning per month. Now, make a list of your expenses. This includes your food, your rent, your electric bills etc.
Also note your current financial challenges. It could’ve been a sudden unemployment, or a medical emergency.
List it down.
Find out the amount left that you can use to pay for the credit.
- Communicate with Your Creditors
The number one mistake people make is to try and avoid their creditors. Either by not answering the phone, or by acting as if they aren’t home when the creditors come by. This escalates the problem.
It plants fear in the creditors part, thus they may resolve to persistent calling and visiting your home. Until such time, it may come to a lawsuit.
These could all be avoided once you decide to communicate with your loan company. Explain your situation, show your expenses and income. Be transparent. Then both of you could agree to a new repayment plan that’s convenient for both parties.
- Increase your Income and Live Below the Means
There are multiple ways to increase an income. One could come up with a side-hustle or a part time job. One could switch to a higher paying job or strive to get promoted.
Sad thing is, when someone increases their income, they increase their spending habits as well. This ends up with the same amount of spare.
When you increase your income, strive to remain with the same amount of expenses. If you can go lower, do that. That will definitely help you get out of debts faster.