It’s called a debt trap or a debt spiral. Once you fall into it, it is difficult to get out. There is nothing pleasant in a debt trap – executors, personal bankruptcy and, above all, huge financial problems.
But taking a responsible approach to lending does not haunt you. In today’s article, we’ll advise you on what to look for before taking a loan.
If you already have a loan and some repayment problems, follow our blog. In the coming days, two more sequels to the Special How to Avoid Debt Trap will be released.
Consider if you really need a loan
First, answer the truth if you really need to borrow money? Our Ombudsman has a simple rule – the product life should always be longer than the length of the loan. It follows that borrowing for dinner in a luxury business is not very wise.
Study the conditions carefully
If you really need a loan and you cannot borrow from your family, get offers from several companies. Compare their convenience and look for information about sanctions and APR , the annual percentage you have to pay.
Verify the creditor’s credibility
You can borrow from a well-known bank, quality non-banking institution or from untrusted entities in the so-called gray zone. The last option is definitely not recommended, because these “predators” have no control over the authorities. Ask your friends and look for references on the Internet.
Think about your repayment capabilities
Never take a loan if you are out of work or have no financial reserve. It could easily happen that you run out of money in installments and your debt starts to increase due to sanctions.
Every loan is a good servant, but a bad master. Choose it wisely and with quality providers who are not just about earning at all costs.