When you are in the red, your highest priority should be to pay off that debt. Often, in order to avoid high interest rates and avoid further spending and budget cuts, those with outstanding accounts resort to debt swaps.
Swapping a debt means making a payment of the amount of debt that presents high interest through a loan of the amount, but with lower interest. The strategy, which should be used in the last case, does not take you away from the red, only relieves your expenses with the settlement of the plots.
Evaluate the debt and try to renegotiate it with the lender
The first thing to do is evaluate the debt and try to renegotiate it with the lender. See how many installments are missing and propose to pay in a smaller number of times, ask for a reduction of interest explaining your situation or try to pay cash.
You can always make a proposal but remember that a bank, or other institution to which you owe, is not obliged to fulfill this type of request, since he has signed an agreement through a contract in which are all the information. The best way to get renegotiated is to save a certain amount to propose the payment of several installments at one time. Just asking for the extension of payment time with smaller installments or a decrease in fees does not guarantee that this happens.
Even if you have achieved a decrease in value that would have been paid for months, your money may not be enough. This is the time to get a loan at lower interest rates and avoid the “snowball”, that is, debt growth.
Compare interest rates and switch banks to get a better loan if you need to. When negotiating a loan, do not just focus on the interest on the value of the installment, also be aware of the amount of installments, taxes and added value. Make a pre calculation by adding up all the items charged and identify which institution offers a loan that will cost you less. One tip is to always search using the same value with the same number of installments and then compare the value of the installments.
Whether you owe overdrafts, credit cards, installments of a car, property, or other consumer goods, you should be willing to research the best way to exchange your outstanding expense for one that costs you less. The following gives you the most suitable forms of credit acquisition for anyone who wants a low-interest loan with better terms of payment:
– Payroll-deductible loans : this type of loan is the most sought after. In this case, the portion is directly discounted in the salary of the individual. Because it does not offer great risk to the bank, it has the lowest interest and facilitated conditions of payment of the installments.
– Secured loans : other ways to get a loan can be thought of as alternatives to repaying larger debt. In this form of credit you can use assets such as your car or property as collateral. With this you will get cheaper plots. But remember: your assets are the guarantee of payment that, if it does not occur, can be taken by the financial institution.
You’re still in debt!
After making a loan and repaying more expensive debt, your worries are not over, they now cost less for your pocket. Therefore, for the exchange of debt is worth it you can not neglect, forget the payment of installments or do not have enough balance in account for the discount of the value in case of direct debited credit of your salary.
Take steps to spend within your limit, without waste. Avoid using overdraft and credit card, so you get away from high interest. Another step you should take is to control spending so you can save money and get rid of debts faster.
Keep an eye on expenses like leisure, shopping for clothes, electronics and other expenses that can be postponed to a time when you are not in the red. Save yourself by focusing on your debt and, at least for the time being, do not use the money left over at the end of the month to get other things.
Know that debt swapping is advisable for urgent cases in which the value of the expense increases rapidly. The most important thing is that you do not get into debt again because this exchange only avoids higher expenses.