- Having debts and not having money to pay them can lead you to think about applying for a loan.
- But this situation can become a “double-edged sword” if you do not analyze your possibilities well.
- Before signing any loan, take these considerations into account.
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Having several debts and not paying them can lead you to an uncomfortable situation that affects not only your rating in the Credit Bureau, but also your life.
When this situation is “at the top” or the debt must be settled quickly, there are various strategies to do so, and one of them is requesting a loan.
This plan is known as debt consolidation and “simplifies your monthly payments into one to provide greater peace of mind. In general, it usually has better conditions since you can choose a more competitive rate, a longer term or a fixed payment depending on the new debt that is chosen, “says Creditas, a platform for services and financial solutions, in a statement.
Are you in that situation? Before you sign a new loan, find out what the advantages and disadvantages of this movement are.
The pros
*You can pay in advance
One of the benefits of having a credit to end your debts is being able to pay the payments in advance.
This will help you not to generate interest and damage your economy.
*All in one place
Using the debt consolidation technique makes you focus on one site.
âThis will be able to reduce the monthly payments (although the time will be longer, the payments will be easier to manage) and you would only pay one institution,â details the platform.
*Possibility of a loan with a lower rate and with assets
Creditas details that there are institutions that offer this service with low interest rates and, for this, you must investigate what your Total Annual Cost (CAT) is.
“Includes all commissions, interest rate, annuity, among other charges, and will help you make a better comparison between loans and choose one that suits your economy,” he explains.
In addition, in some of them you have the possibility of accessing the mortgage or car guarantee.
*It is a reasoned decision
When choosing a credit to settle your debts, you do it in a reasoned way, taking into account everything from the interest rate to the penalties, and without compromising all your income.
The cons
*Not investigating and not having a plan
Desperation can lead you to take the first credit offered and run the risk of having more debts.
According to the platform, âif the rate is too high, this will increase the probability of not meeting payments or that they will be late.â
To this is added not having designed a plan to apply for the new loan. In that, the current debt and your monthly expenses must be included, in order to avoid damaging your pocket.
* Not understanding the credit conditions for your debts
Creditas indicates that you must read the “small print” of the contract, the interest rate, commissions, among other aspects.
“Resolve all doubts and read the terms and conditions well, to avoid surprises later,” he says.
*Believe that the loan ended your problems
Having an approved credit and ending your debts will not solve your life completely, but it is a step to learn about personal finances and be responsible.
* get in debt again
This is very common, so the platform points out that it is vital to have guidelines and habits to better manage resources.
If that does not happen, “there is again the temptation to make non-essential purchases that will only be added to the new debt acquired,” concludes Creditas.
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