It is not surprising if you have multiple types of loans. Many people begin to feel perturbed as the level of debt rises. With effective management tips, you can avoid being submerged in debt even if you have different types of loans such as quick loans in Ireland, credit card debt, student loans and personal loans.
Even a smaller amount of loan seems to be difficult to pay off after you fall behind repayments, let alone multiple debt repayments. Borrowing more money to pay back the existing loan does not seem to be an ideal situation. It transforms from one form to another, but does not let up your burden.
Well, whether you have a large amount of debt or have a pile of different loans, following tips can help you get rid of it as soon as possible.
Seek minimum payments
If you have been juggling through multiple debts, talk to your lenders and ask them to allow you for minimum payments. Inform them of your financial assistance. Make sure that you do it before making a default. This shows a sense of financial responsibility and lenders will not mind accepting your request.
The lender is likely to put you on a different repayment plan, but they will look over your financial records. If a busy schedule, not money is the reason for facing difficulty in managing repayments, opt for auto-debit mode.
Repay high interest loans first
When you have a combination of different loans, it is natural some will have low interest and some will have high interest rates. Small loans such as quick loans with same day disbursal are more expensive due to lump sum payments. Defaults will attract interest penalties and late payment fees. If you have a mortgage, you may lose your home if you continue to miss your repayments.
Try to have money set aside for your small loans. Once you pay them off, all your stress is gone. If you have personal loans and a mortgage, try to give priority to the latter as there is a risk of losing your home and talk to the lender if they can allow you for paying minimum payment of the former.
Pay more as your income increases
The concept of minimum regular payments is an ideal choice when you face cash shortfall. As your income goes up, you should start paying more than the minimum requirement. You can ask your lender to switch you back on the previous repayment plan.
It is crucial that your lender knows you are about to pay more than the required amount, otherwise you will be liable to pay additional fees.
Maintain financial discipline
Financial indiscipline is one of the biggest reasons for falling into a predatory debt cycle. If you want to reduce debt burden, you will have to change your spending habits. Cutting down on unwanted things and luxuries will help you have enough money to pay off your debts.
Budgeting gives a clear insight into where and how much money is going. Pursue the trend of expenses and look over areas where you can whittle down. Give priority to your debts and put rest things on the back burner.
Look for lower interest rate deals
Life can throw you a curve ball anytime. You may lose your job or you may need to spend all of your savings for an emergency. How will you settle your debts if you are running out of money? If you feel that you will not be able to make the payment, talk to your lender before the due date comes and ask them to provide you a lower interest rate deal.
You must remember that a lender will consider approving a lower interest rate deal only if you have made repayments on time earlier. Otherwise, you will be considered as a borrower with a high default risk and lender will not consider your proposal.
The bottom line
You can avoid getting into the burden of debt if you do not borrow more than your affordability and you follow financial discipline. If you have been struggling with multiple debts, cut down on your unwanted expenses, look for a lower interest rate deal and ask the lender to provide another repayment plan.