Today, loan relations have firmly entered the life of every modern person. Banks offer various forms of loan as well as there are private lending organizations offering fast loans online. They are designed to meet the needs of various segments of the population. What do lenders offer their customers? It is worth noting that loans differ in terms from lender to lender. The essence of the loan is to give the certain amount of money and get it back together with the certain percentage.
Loan relations are the cooperation of the two parties. In this transaction, each party meets its needs. Each person has his own needs and requests, so the lenders, competing with each other trying to satisfy all the requests, are constantly working on the development of new loan programs.
The most popular loan is aimed at the basic consumer needs. This type of lending is offered by banks of any size and form of ownership as well as payday lenders. To obtain this type of lending, as a rule, it is enough to show a passport and after that, the borrower can become the owner of home appliances or an expensive computer.
How Do the Classical and Online Loans Differ?
The difference between an online loan and a traditional loan is that all or almost everything happens without any personal communication between the borrower and the lender. Registration of all documents, especially their filing, takes place in electronic format.
Find the service of providing remote loans through the network is possible on the page of almost all significant lenders. As in the classical case, it is necessary to begin with acquaintance with the financial aspects of the forthcoming transaction. What are the conditions for issuing a loan? Who can claim it? How high is the interest rate and what are the potential sanctions for a violation of payment discipline? In the same way, as in the usual version, you should analyze a variety of proposals from all available to you.
If you cannot directly compare (there is not enough financial knowledge or information too much), you need to resort to special online services, the so-called loan calculators. When you can say that such an offer suits you, it’s time to fill out a loan application. Even an insignificant mistake can cause a complete refusal. The employee of the lending organization will inform you about the results of the check of the application, basically it occurs within a quarter of an hour after you submit it. On the basis of a short conversation and clarification of unclear points, the consultant will make a decision.
How to Use a Loan the Right Way?
The knowledge on how the loan works is the guarantee of your financial success. This is not taught in schools or universities, let alone in banks. However, everyone should be able to know how to use the credit the right way. This will save you a bunch of nerves, time, money, and even can bring profit. The competent use of the loan consists of the following components:
- The study of the general state of the credit market
- An honest answer to yourself: “Do I really need a loan in this case, or can I do without it?”
- Psychological and financial preparation for taking a loan (assessment of your real financial capabilities, creation of a reserve fund, opening of deposits – all this is necessary for insurance in case of unforeseen circumstances).
- A competent approach to choosing a loan (if you still answered yourself that a loan is needed).
- Regular and timely repayment of the loan.
- Studying of the financial legislation of your coutry.
What Are the 3 Cases When Getting a Loan is the Right Decision?
What should I use a loan for? It is recommended to borrow money only in three cases:
- When you plan to buy a house but you do not have your own money (it’s better than paying someone money for renting real estate or for years to save your money with fear at any time to lose it due to devaluation), although in some cases you can lose housing;
- When money is urgently needed for expensive treatment (after all, health is more expensive and above all);
- When the loan can pay off (if, for example, you bought a camera and started using it to earn money or graduated on credit, that is, you invested in knowledge that will pay off in the future in advance for you).
However, you aren’t recommended to get household appliances, cars and some other luxuries. This becomes not only an extremely costly occupation, but also develops a bad habit of living all the time in debt, thus forming debt dependence.
Questions You Should Ask Yourself Before Lending Money
So, let’s say you have decided to use the loan. To do it competently, you need to honestly answer yourself to several questions:
- What purpose do I plan to get a loan for? And does this purpose justify the means spent?
- What monthly payment can I make without problems and damage to the family budget? (the main thing is that this amount is not more than 30-40% of the total income of the family!)
- When will the retirement age of the oldest of the spouses? (note that most lenders do not give out loans to people over 70).
- How much will I be willing to contribute as a down payment, if any?
- Am I the owner of a certificate for receiving maternity capital?Am I ready to lend my property to the bank on bail?
- What are my official and unofficial sources of income?
Before you make out a new loan, you need to think about how to repay it. Untimely fulfillment of obligations to the creditor threatens not only overpayment of interest but also additional costs in the form of fines and penalties. If the case for a loan falls into collection services, then it becomes difficult to find any compromise solutions. Non-repayment of a loan, as a rule, threatens the arrest of both movable and immovable property of the debtor. In addition to the borrower can apply criminal liability, mainly this occurs in the proof of fraudulent actions.
In such situations, lawyers and collectors offer debtors a “problem-solving” for a certain amount of money. But as practice proves, issues with the loan are not solved, only time is dragged out to litigation, after which it is possible only a minor write-off of fines and penalties. If the borrower is set up, to return only the principal amount of the debt to the creditor, without interest and penalties, then the probability of solving the problem is small.
Therefore, it is necessary to first create a plan for protection from the creditor, to attract the same help lawyers need in some cases. For example, when it is necessary to draw up a complaint to the prosecutor competently, to sue in court, to challenge the court decision. In all other cases, the payment for the services of a lawyer will be in vain, and the money is wasted. The borrower can transfer the debt to a third party only upon the consent of the creditor. But, as you know, the bank makes such concessions only if there is nothing to borrow from the debtor.
Do not trust your “well-wishers”, who boast of “reliable connections” with banks and the fact that they will be able to solve all the issues concerning loan debt instantly. You will be promised that for a fee all debts will be written off. It is not necessary to believe in this, all financial institutions can actually write off delinquencies, but not on anyone’s petition. In such difficult situations, never take hasty decisions, carefully think things out, there is always a way out. You can try to find additional income and refinance your loan, or reduce your expenses.
Tips on How to Repay Loans Faster and Not Get into a Debt Hole
It’s natural that the more and more often a person borrows, the higher the risk of getting into a debt hole. Especially, if he/she has several loans at the same time. Want to know how to pay off all your loans faster, bypassing the debt hole? So, where do you start to pay off your loans faster?
First, collect all your loans in one heap and count how many you have them. If only one, then there are almost no problems at all! To quickly repay a loan, simply increase your monthly payments by 10-20%, depending on the possibilities of your family and personal budget. And most importantly, remember: every month you pay more than the minimum loan amount! If you have several loans, first of all make a list of all of them.
Do You Have a Loan Dependence?
Surely, everyone has heard about such a problem as the “loan dependence”, when the borrower already without any special need starts using borrowed money. A loan for such people is the meaning of life, their target. Loans help them to remain independent, responsible. But it turns into a huge debt, fines and even loss of property. However, according to experts, not less terribel is the disease, that is, fear of banks, private investors, creditors and loans themselves.
A large variety of credit products and organizations providing similar services can lead an ordinary person to serious problems. So, to buy expensive things: a washing machine, a gas stove or a car – this becomes the most common reason why people apply for loans. It is expensive to pay the entire amount in full and buying with the help of a loan seems to be the best and fastest solution. Every second person thinks “ Why wait, save money, if you can take a loan, buy what you need, and then pay?” This is the problem. A person does not think about the responsibility he/she brings. Gradually, making out loans, the client gets used to the fact that he/she can always rely on the lending organization, draws up more and more loans, gets used to constantly pay on the loan and so there is a loan dependence is formed.
The main move taken by banks, in order to convince a person to borrow money – a credit card. Agree, it’s tempting to understand that you have an opportunity to get everything you want here and now. Quite often, people make several loans at once, without thinking about how they will pay, and eventually gaining a huge amount, understand that they are unable to cope with payments. To pay for two already issued loans take another one, thus, getting into the debt hole. To avoid incurring trouble, in such cases it is worth contacting the bank. Having explained the whole situation to the lender, you can get help directly from it, that is, the bank can offer you refinancing, making a new loan, but on more favorable terms than those with which you yourself would have issued a loan. It is also possible to provide you with a loan holiday: for several months you will not need to pay the loan at all until your situation improves.
If none of the above does not help you and the craving for credit is strong, then you should turn to a psychologist, as dependence on the registration and payment of a loan is a disease, like alcoholism, and only a specialist can help.
How does the credit-phobia or fear of getting a loan disease manifest, what are its symptoms and how can you cope with it? This is a rejection of loans and lending institutions. These concepts in the mind of a person are associated with “evil” and “deception”, and therefore they should be avoided. The state of anxiety appears even when necessary to visit a financial institution for the purpose of paying for utilities and compulsory payments, for example, taxes or alimony. There are also difficult situations when, at the sight of credit cards, the consumer starts to get nervous, get angry and shout, begging to remove this “unreliable and unsafe tool”. Such people refuse even salary cards, preferring to receive payment for their work in cash. And what should such people do when they need financial help, a loan that can save lives or restore health?
It is believed that it is easy to cope with credit phobia. It is only necessary to reconfigure the mind of a person to the perception of banks and credits. Financial institutions are not “hunters” for their “blood”, but only assistants, guides in the world of payments and transfers. They carry out their activities on the basis of the savings of depositors, borrowers and make every effort to keep them from scammers, because they themselves are not interested in losing funds, even for them they are negotiable.
As for loans, this is not necessarily bondage. This tool helps people solve problems. Within reasonable limits, loans are given a chance to restore health or pay for training. And if you read the contract, look in detail the schedule of payments and independently calculate the overpayment, you can see that the loan will not ruin your budget if you follow the loan requirements and pay it back without a delay. And if you make an early payment, you can save on interest and quickly get rid of your obligations. For peace of mind after debt repayment, the borrower always has the right to request an official certificate and confirmation that the lender has no claims to it. It is necessary to fight the phobia of loans because in some cases without them in modern life, problems cannot be solved.