There is absolutely nothing wrong with borrowing for consumption, and there never has been. However, there is still a tendency to think that online consumer loans are shameful, but we are trying to do away with this informative article.
We do this, among other things, by providing you with the necessary information so that you can borrow for consumption in a sustainable way. Here you will get three very specific tips on how to take out a loan in the most appropriate way so that the loan will not adversely affect your life or your finances.
1 – to take out the right loan
First and foremost, of course, it’s all about taking out the right loan. But what does that mean? To make it very short and simple, it means finding the cheapest loan that matches you and your needs at the same time.
You can do this, for example, by comparing consumer loans. When making your comparison, you can do this as follows:
Step 1: Find the Five Cheapest Loans. You do this primarily by looking at the loans OPOP.
Step 2: Choose one of the five cheap loans that best match you.
It doesn’t have to be harder. However, this approach also shows that the cheapest loan may not always be the right choice for you. If the other terms that define the loan do not match your finances, then the cheap loan may prove to be far more expensive than expected. Therefore, you will also often have to look at items such as maturity and monthly installments when making your choice.
2 – to keep track of
When the loan is taken out, it’s all about keeping your tongue straight in the mouth. As you know, some money has to be paid off on the loan each month, and if you do, the debt will be less. However, if you lose track of your finances, you may also miss some of these payments, which can cause interest rates to rise – keep in mind that non-performing loans are expensive loans.
But how do you keep the overview?
This is most easily done by setting a budget that includes the monthly repayment on the loan, so you know there is always money for this.
3 – to repay properly
Now the loan is taken up and you have the full overview. Now you can start to consider whether to repay the debt in the most optimal way.
No financial situations are the same, so there are also several ways to pay off your debt. Here are two very popular methods that apply to people with multiple loans:
The avalanche strategy is that you pay off the most expensive loan first to save on the cost of the loan.
In order for this to be possible, you will need to form an overview of your various loans. When applying the avalanche strategy, focus on the loan that has the highest APR. So if you have seven different loans, then you can advantageously make an excel sheet where you organize them in a sequence where the loan with the highest APR comes first.
In doing so, you must pay the least amount possible on the remaining loans and focus as much as possible on the most expensive until this is fully paid off. However, it is a must that you do not default on your other loans. Therefore, you can contact your creditors and agree a minimum amount. When the most expensive loan is paid off, you move on to the next most expensive and so on.
The snowball strategy is that you pay off the smallest loans first. When the loan is paid off, this will release some money that you then pay extra on the second least loan.
The fewer loans you have, the larger your overview will be. And this must be said to be the main advantage of this particular method.
Mathematically, however, it is the avalanche strategy that is the most effective. This is especially true if you have some loans that are very expensive and other loans that are relatively cheap.
On the other hand, if you have a handful of different loans that cost the same, then it makes great sense to apply the snowball strategy.
However, this strategy also requires you to get some good deals in place with your creditors. This also applies to paying as little as possible on the large loans, so there is more money to pay off the smaller creditors.
Bonus advice – talk about your loans
Now you have received three good tips on how to borrow in the most optimal way. But don’t be cheated for an extra bonus tip.
One of the biggest burdens that indebted people bear is that they are ashamed of the debt. This is especially true for consumer debt. However, there is no reason for this. As long as you have a repayment plan, there is nothing wrong with having consumer debt.
In addition, you can help yourself to deal with the shameful by simply talking about it. The more people who express a positive attitude towards consumer loans, the more socially acceptable it will become. Because there is nothing indefensible about borrowing money for consumption. Especially not when you set a budget and have a plan for your repayment. Ift. To talk about your loans, you also need to get advice from the bank or other professionals. So you can also get professional help and overview if you are in a situation where you suddenly can not see it yourself anymore.