Is taking a loan worth it? For the answer is: it depends. But how so? It is simple, there are different types of loan in the market. There is paycheck credit, personal credit, financings, loan for negative, overdraft, credit card, among others, and each has a different condition.
In addition, among the loan types there are different rates, payment terms. And among debts, well, each one has a certain condition as well.
When is it worth taking a loan to pay off debts?
Quite simply, the loan to pay off debt is worth whenever you have a large debt and will swap it for a small one. In addition, it can be a good option for consolidating various debts.
But there are also situations where taking a loan is not the best solution. This is usually the case of those with the negative name, after all the loan in this situation is usually accompanied by a high interest rate. That is, taking a loan being negative can make your debt grow bigger.
But then, in what situations is it worth exchanging a debt for a loan? Let's respond on a case-by-case basis.
If you are on the credit card rotary, for sure taking a personal, payday loan or secured loan will be a better alternative. That's because in these loans the interest rates are much lower than those charged on the credit card.
Here we have another expensive debt. Unless your bank offers you a few days free on overdraft, as is the case with some, if you got into this debt is good to run. Exchanging this credit for a cheaper one is easy considering that overdraft interest rates are very high.
Unless your consumer bills are about to cause service outages or the denial of your name, the rates of these debts are often not so high. It may be the case that you do the debt renegotiation directly with the company and try to pull funds from other means that you have.
If you are unsure, the personal loan or payroll loan can help you in this case. Either way, in general the minimum amount to take credit will be much higher than the debt you own.
Do you have financing and are you in arrears? The first step is to seek the lender to renegotiate the debt, as the lack of payment can lead to the loss of good. If the rate of your financing is too high, you can look for better credit options in the market and thus pay cheaper for the loan.
Anticipation of accounts
When you anticipate repayment of financings, for example, a new calculation of the interest to be paid is made, causing it to have a discount. But is it worth taking a loan to do this? Well, most probably not. That's because the discount may be less than the Total Actual Cost you'll pay on the new loan.
However, if you are anticipating paying an expensive debt, i.e. with high interest rates, it may be a good idea.
Unless you are negotiating a great deal, taking a loan to make a purchase can be expensive. When deciding whether or not it is worth doing, consider what the need for the purchase is right now and how much you will pay in full with the interest on the credit operation.
Of course, there are cases where the loan can be a good solution to buy. This is because not every company offers the sale with installments without interest and, in these cases, installment on the credit card would be more expensive than other types of loans.
Whenever you want to know whether or not it is worth exchanging a debt for a loan, you should consider what the Total Effective Cost of your current debt is and how much you will have if you take the loan. In addition, if you decide to take a loan, you should always compare the CET of several companies, as each institution works with a credit analysis of its own.
Posted on May 11, 2018 at 01:42 PM