Living from month to month and using loans regularly is not difficult to fall into a circle of loans. Often practiced by debtors, taking loans to pay the previous payments often ends in a tragedy.
However, is a loan always a bad idea? How to get out of debt in a relatively short time without incurring high costs in the form of, for example, loss of property?
Debt Payment Plan
The absolute basis when trying to untangle the credit circuit is to create a debt payment plan. The worst possible idea is to borrow more without having an idea of what to pay. This type of procedure postpones the problem on time, but eventually ends up in bankruptcy. Therefore, it is necessary to create a plan that takes into account factors such as:
- monthly expenses and commitments
- The maximum monthly amount that can be used to pay loan installments
- priority loans
- amount for unexpected expenses
- payment calendar
Of course, the credit cycle is a concept that is used in the case of debts that exceed the possibilities of free payment of loan installments. Therefore, getting out of it requires sacrifices and savings. Therefore, monthly expenses should be reduced as much as possible so that you spend money only on what is definitely needed for life. However, it is important to realistically determine the possibility of saving when planning your refund. Otherwise, you cannot implement it.
Loan to pay obligations
A frequent solution used in the case of a credit cycle is for clients to obtain more loans. Very often, this ends with a deepening of the debt, but reasonable loans can also be useful. A good solution could be to pay the payday for zero USD. Today, many loan companies offer their first free loan. Therefore, the debtor has the opportunity to pay existing liabilities without incurring additional costs. However, for the payday loan to be a good solution in this situation, you must meet the following conditions:
- long repayment period
- without interest
- installment payment option
- it is not necessary to configure the customer in the debtor registry
Of course, a low interest bank loan can also help you get out of debt. However, the credit cycle generally generates an entry in the debtor registry. Therefore, the chances of obtaining a bank loan become small. In some cases, you may also be tempted to pay a payday interest rate if it is possible to pay it in distributed installments over a longer period of time.
Help from a credit counselor
Creating a payment plan or finding a good loan to settle debts often seems to be too much for the laity. Therefore, it is helpful to have a credit counselor who provides advice on how to create a plan and advice on the optimal loan selection. Credit counseling services are not free, which discourages debtors. It seems, however, that this additional cost should be assumed to leave the credit cycle.