Our entire society has come to revolve around using the banking system. Whether it is a matter of purchasing a home, a new laptop, a phone, or paying for an expensive medical procedure, lenders have made it easier than ever to get a loan. However, as easy as it may be to borrow money, the terms and conditions that individuals get are still subjected to the state of the economy, especially if the loans have a variable interest rate. This can take certain loans that seem affordable at first and turn them into highly expensive nightmares. In some cases, even a single variable rate loan can be enough to put a serious dent in one’s finances and make it difficult to keep paying the regular utility bills and other expenses. Things can get more complicated if we also factor in credit card debt and instant short term loans.
However, having to manage extremely expensive debt is not a financial death sentence. In most cases, reducing the cost of an individual’s loans is only a matter of careful planning and taking to the lender. Here is how you too can manage expensive forms of debt:
· Go to the Bank and Refinance Your Loans
Almost all lenders will agree to refinance an individual’s loans if he specifies the fact that he is having a difficult time repaying them. Depending on the borrower’s credit rating, this may be more or less effective, however, in most cases, it should be enough to reduce the interest rate of the debt by up to 20%. This also works for secured loans, simply because lenders would rather get their money back instead of having to take possession of the borrower’s property.
· Get a Debt Consolidation Loan
It is also possible for individuals to get a debt consolidation loan. This can be done before or after refinancing the debt. However, it is usually more profitable for the borrower to first refinance as many loans as possible and only then get a larger, secured debt consolidation loan that can be used to cover them entirely. As a word of caution, please keep in mind that these loans are often secured against the borrower’s home, which means that not repaying them on time will lead to the bank taking possession of the collateral. Other than this, they are great tools when it comes to managing expensive debt. Most consolidation loans have relatively low, fixed interest rates, making them easy to repay.
· Get Some Breathing Room
If you are simply going through a difficult time, financially speaking, getting a second mortgage may help alleviate the issue. However, this can put individuals in deeper waters than before. Generally speaking, the best way to make a bit of financial wiggle room is to avoid using credit cards and taking out payday loans. If you need money for day-to-day expenses, then simply use an online money lending services such as P2P platforms. These allow individuals to borrow money at low-interest rates and the transactions are not reported to credit registers so the loans will not appear in one’s permanent financial records.
· Find a Secondary Source of Income
This is not the ideal solution, however, if nothing else works, finding a secondary source of income should not be difficult. In the age of the internet, it is easy to create content and have it passively generate money. Consider what your skills are and try to create courses to teach others. While you may not earn a lot at first, the amount of money should grow as time passes.