After all, is it worth applying for a loan to pay off debt?

More than 60 million people closed the year 2018 in red. Getting out of this situation is not easy at all. However, it is not so difficult to find, especially in the media, a tip for paying off debts: apply for a loan. As you know, there are cases and cases.

In this context, is resorting to this solution really the best alternative? That’s what we will find out now.

Examining the financial situation

Examining the financial situation

Few things are more uncomfortable than being owed in the square. Often this annoyance leads us to desperate decisions to get out of the red. But take it easy: this is a point that requires planning.

Firstly, it is important that you have a clearer picture of your finances, ie how much you earn, how much you owe, and how long the debt has been running.

Is it worth applying for a loan?

Is it worth applying for a loan?

With this X-ray, it is time to consider whether a loan really is the most advantageous option. Remember, this decision depends strictly on the type of your debt. Here’s where you shouldn’t think twice about applying for a loan:

1. To clear credit card or overdraft debts

There is an option where, in the first place, the loan is the best option to get out of the red: when the interest on the loan is lower than the debt. Who owes the revolving credit card and overdraft, for example, falls into this category.

This is because credit card and overdraft interest are the highest in the market. This is exactly what makes debt snowball in the blink of an eye.

In this case, you have to make a quick decision, and lending is a great option. Make sure the company you work for offers the payroll loan, the one in which the amount of the installments is debited directly from the payroll.

If this is not possible, resort to the increasingly popular personal loan – especially the online loan, which can be applied for without having to leave home.

2. To get your name back clean

As you know, being negatively named creates a number of restrictions. For those who want to rent or buy a house or even change their car, for example, these options are practically unfeasible.

In this case, it is also advantageous to get a loan. After all, this type of transaction will no longer set up a debt, which will cause you to clear your name again.

Care to get a loan

An important tip: Before getting a loan, make sure your income allows you to repay the installments on time. Ideally, debts should not commit more than 30% of your budget.

As mentioned above, give preference to lower interest rate operations such as payroll loans and personnel. Not least, research the financial institution from which you will borrow.

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