Different people treat loans differently. For some, this is a way to get what they want for a long time, for others – to get out of a crisis situation. But sometimes an unreasonable loan attitude can lead to debt. It turns out to be a snowball situation – a person cannot pay off a loan, takes new loans, pays interest on an old loan (vay tiền), and interest on a new one is already beginning to accumulate. Thus, the number of borrowed loans is constantly growing, the amount of interest exceeds all conceivable sizes. Very often, such a snowball ends in bankruptcy and the loss of most of the property. How to use loans and not drive yourself into debt?
Online loans – how to get
These questions have become very relevant lately, when it has become so easy to get a loan for a small amount – just fill out a special form on the website, and literally within an hour get the desired amount on the card. You can even borrow money online with driver’s license as the only document. Very often, the advertising of such services does not indicate the interest for using such a loan, and they usually significantly exceed the bank. Of course, one can understand MFIs – the provision of such services is a rather high-risk activity, the percentage of non-repayment of such loans can be quite high. When issuing a loan, ten to fifteen minutes is absolutely not enough to fully assess the client’s solvency. But very often such companies meet the needs of customers and issue loans with a large share of confirmation.
When is it worth applying for a loan
Such ease of obtaining an online loan is very often misused by not quite conscious citizens. This, of course, is facilitated by the active marketing policy of many microfinance organizations. In order not to get on the credit hook, it is worth considering several important points before submitting an application:
- It is reasonable to take a loan if its use will further improve the financial situation – for the purchase of machinery or equipment that can be used in work, for the modernization of processes, allowing them to accelerate, for education or certification;
- In cases where a loan is needed for urgent financial assistance, you should take the minimum possible amount that will allow you to overcome the crisis;
- You should never take a loan for the purchase of those things that a person cannot afford without a loan – an expensive phone, a large TV, a fancy gaming computer, except for those cases when this is a means of earning;
- It is strictly forbidden to take a loan at an online casino, bets, lotteries in the hope of winning, which will allow you to pay off all debts;
- You can not take a loan to meet immediate needs, especially those related to addictions – alcohol, drugs, gambling and others.
What if you have debts?
No one is immune from unforeseen situations. A situation may well arise when interest rates on loans have crossed the critical line and become unaffordable. In this situation, the most important thing is to admit it in time. The next step should be the formation of the most complete and accurate list of all loans, indicating the place of receipt, the amount of the loan body and interest on it. If the total amount is not yet too large, it is worth allocating the debt with the highest interest rates – it will be the first in line to be closed. The higher the interest, the faster this debt needs to be closed. Moreover, there are enough opportunities for this in the financial market now.
- How not to increase debt if there is no way to pay back
Another important factor that should be considered in parallel with the calculation of loans is the formation of your own budget. Indeed, in addition to calculating how much you need to pay, you definitely need to know how much you can pay. It is important to include in such a budget for the period of recovery from the financial crisis only those payments that cannot be postponed or canceled. Only the essentials that meet the basic needs. New items, entertainment, restaurants should be postponed until after the crisis is over. As a result, the formed amount will help to get an idea of how to further form the loan portfolio. You will have to proceed from two amounts – what you need to pay according to the list, and what you can take after paying all the mandatory payments.
After the list is formed, the most important thing is not to take new loans until a complete audit. This will allow not to increase the total amount until all opportunities for its reduction have been used. There are traditionally two such opportunities – restructuring and refinancing.
- Restructuring
Restructuring can be provided by the company that issued the loan. It consists in revising the terms of lending in order to reduce the monthly payment, most often – with an increase in the loan term. Thus, despite the fact that the loan will have to be paid for a longer time, the amount to be paid monthly will decrease, which will allow you to establish a schedule of regular payments. One of the constituent parts of the restructuring is credit holidays – a situation in which the bank meets the client halfway and releases him from paying part of the payment for one or several months, most often leaving interest and removing the body of the loan. Not all banks offer such conditions, but it’s worth asking – what if the bank is just practicing credit holidays, this will allow you to leave the acute crisis phase with less losses.
- Refinancing
The second type is refinancing. This step may be more beneficial. It consists in finding the most advantageous offer on the financial services market at interest rates and taking a new loan in order to close the previous, more expensive ones. This allows you to significantly save on interest, very often without increasing the loan term. For example, Oncredit.vn offers very favorable rates and meets halfway those clients who have loans in other organizations on less favorable terms. And instead of several expensive loans, the client is left with one, on the most favorable terms. This allows you to focus on your main job, rather than looking for new loans in order to pay interest on previous ones.
How to use an online loan to pay off your debts
So, in order to pay off debts, it is quite possible to take an online loan from an organization that offers more favorable conditions. This will help to significantly save on monthly payments by investing the released funds in the gradual repayment of the loan body. Thus, taking advantage of the loyalty of financial institutions, you can pay off your debts and stop building up your debt burden. Moreover, it is very easy to do this through a personal account on the company’s website, where there are all the necessary tools in order to calculate all interest and payments and decide whether it is profitable.
Loans are a normal financial practice; they are taken by both individuals and large companies. It is very important to learn how to properly use such a financial instrument, which actually opens up quite large opportunities. With proper use, even small online loans can allow you to start or develop your own business, try yourself in a new profession, or get a start in the form of a new education or professional certification. When obtaining a loan, it is very important to understand that a large amount will have to be returned, and to sensibly assess your capabilities. A loan is not a tool to satisfy desires for a new gadget or travel to an expensive resort. But investing this money in order to start earning more and buy a new phone with the earned money is the main point of loans. Of course, force majeure operations do occur. In this case, it is worth taking the time to find the best deal on the market.
Credit history
Separately, I would like to note the existence of such a thing as credit history. These are the most detailed records of how the loans were regularly repaid by a particular borrower. This information allows you to draw conclusions about his payment discipline. Despite the fact that credit history is unofficial information, financial organizations very often use it to make a decision on granting loans. Therefore, it is better to deal with reformatting loans before information about late payments arrives in the credit history, which significantly lowers the credit rating. In this matter, it is better to stay ahead of the events – it is easier to negotiate favorable refinancing of old loans with a high credit rating.
