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How to prevent over indebtedness credit?

The number of over-indebted households in Germany is still at a consistently high level. Unemployment has decreased slightly and the number of insolvency openings has decreased compared to previous years. Nevertheless, given 3.36 million over-indebted households, it is a persistent mass phenomenon.

Over-indebtedness

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This is the result of the representative study “First results of over-indebtedness statistics” by GISTA, science magazine of the Federal Statistical Office, issue 2/2016. In the context of the 2015 overindebtedness statistics, 410 of the 1,400 debt counseling centers in Germany were examined and data from around 103,000 advised persons were evaluated and extrapolated.

According to the study, the main reason for overindebtedness is the loss of a job. Almost 20% of those who received debt advice in 2015 experienced financial difficulties as a result of unemployment.

Unplanned changes in life circumstances such as separation, divorce or death of the partner as well as health problems, such as addiction or accident, are among the most common causes of overindebtedness. The average level of overindebtedness in Germany is USD 34,368.

Debt is not the same as over-indebtedness

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Debt is not the same as over-indebtedness. While there is talk of debt even with the smallest installment loan, one only speaks of overindebtedness when the debtor is no longer able to meet the payment claims with his income and assets.

Once you have landed in the debt trap, you can usually no longer find out without external help. Private bankruptcy often occurs. Therefore, consumers should not let it get this far and prevent overindebtedness in good time.

We have summarized the most important tips:

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  • If you have a relatively low income or already have to pay a number of liabilities from existing loans every month, you shouldn’t act hastily, but first, get an overview of your income and expenses. A household book can be a useful help here. Anyone who conscientiously maintains their income and expenses over a period of at least 12 months always keeps an eye on their finances. The numbers can be used to determine exactly whether and to what extent you can afford a new loan. This requires a bit of discipline at first but quickly pays off.
  • Indirectly, keeping a household book forces you to take a closer look at the expenditure page and to ask whether some expenditure is necessary for the amount or at all. For example, old contracts with telecommunications or electricity providers are often expensive and do not include better services. Switching providers can often result in enormous savings. This financial scope can now be used by consumers to pay the installments for a new loan.
  • Debt rescheduling can also save considerable amounts of old loans. By combining several old loans into a cheaper debt rescheduling loan, the monthly rate can be significantly reduced. Another positive side effect: The fact that only one monthly payment is debited gives you a better overview and control over your credit liabilities.
  • Consumers should be well informed before taking out a new loan and should not sign the best offer straight away. A comparison of different providers based on the effective interest rate is advisable and sensible in any case. Credit comparison sites on the Internet provide a good overview of various offers and provide an initial orientation in the search for the right loan. Get free advice if you are unsure or have any questions. Good Credit cooperates with a large number of partner banks and is able to determine exactly the right offer for you.
  • If despite the reduced expenditure, the income is still not sufficient to cover additional financing needs, it should be checked whether it is possible to screw on the revenue side. It doesn’t always have to be a side job. For example, if the children are out of the house, owners of an apartment or house can also consider renting premises to increase regular income.
  • In principle, consumers should first check whether an additional loan is always necessary. Sometimes consumers resort to cheap financing offers from banks for convenience, although the sale of technology that is no longer used, inherited jewelry, or second and third-party vehicles could easily have met the money requirement.
  • Perhaps the most difficult factor to prevent over-indebtedness is to control his desire to buy or not to be tempted by “decoy” offers to excessive consumption. Cleverly designed and designed advertising or limited promotions in retail try to encourage consumers to buy using 0% financing. Even if such offers sound good at first glance and buyers are supposed to get the interest on the loan, they shouldn’t make rash decisions. Free financing is often included in the purchase price or is actually just a slightly different form of advertising budget.
  • The easiest way to get a loan is to just overdraw your account, many think. Bank customers do not even have to make a separate application for this. However, the overdraft facility is tricky. Because those who overdraw their accounts often do not think at the moment that the expenditure in the following month would have to be all the lower in order to be able to compensate for the overdraft facility. However, monthly expenses often remain at a consistently high level or even increase. At some point, you end up in a permanent minus. The interest rate on an overdraft facility is usually many times higher than that of a normal installment loan. It is therefore urgent to avoid overdrawing your checking account permanently. It is better to replace the overdraft facility with a cheap installment loan.
  • Usually, banks request the Schufa score when applying for a loan in order to find out the creditworthiness of the applicant and thus to be able to correctly estimate the probability of default. However, it is not uncommon for stored data at Schufa to be out of date and therefore incorrect. In case of doubt, it could happen that an applicant’s creditworthiness is wrongly classified as too bad and the interest rate is unjustifiably higher or even rejected. Consumers who are planning to apply for a loan in the near future should therefore definitely obtain free Schufa information beforehand. This gives you an overview of the data stored at Schufa and can be used to correct or delete incorrect data.
  • Should a payment default actually occur on a current loan, the person concerned should not remain passive and sit out the matter wordlessly, but instead go proactively to the bank and seek the conversation. As a rule, creditors are always interested in finding a solution together with the borrower. For example, a break in payments or a reduction in monthly payments by extending the term can be a viable option for everyone involved.
  • If an extension of the term or installment break is no longer a way out, consumers should not be afraid to go to debt counseling. Those who get help from professionals in good time have a good chance of getting their finances under control again. In any case, the goal should be to avoid personal bankruptcy.

How can you repay a loan with a loan? Take out a loan from the bank. Is it possible to repay the loan early?

Modern life is a cycle of circumstances that can violate well-designed and constructed plans. The problem of the emergence of financial problems in the past decades is used to that modern people solve in banking institutions.

Citizens have the opportunity to borrow money to buy real estate, cars, household appliances, furniture and other goods that are necessary for a normal life.  

The loan is also intended for buying building materials, solving business problems, treatment, rest, study and other needs. Any citizen with good credit and permanent income can take out a bank loan.

Obtaining any type of loan is easy enough because the banking sector has come up with a variety of loan programs that work like a magic wand to solve current problems. Bank customers often don’t even think that situations could arise in which debt repayment becomes a problem.

What can affect the ability to pay mandatory payments?

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The causes of the complexity of the crowd. You can be:

  • Job loss;
  • a disease;
  • a jump in exchange rates;
  • Death of a family member;
  • one of the earning family members becomes unemployed;
  • Negligence;
  • the appearance of other life problems that have caused the financial losses.

Possible problems with loan defaults

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Failure to Pay Compulsory Prisoner Payments The loan agreement has a number of other issues. It starts with the call from bank employees, then complaints letters from the management of the banking institution, legal action, executive staff are displayed at the debtor’s address. And worse: threats from special services.

The intimidation of unscrupulous borrowers is becoming a popular method of raising debt. In addition, credit bondage provides a penalty for non-payment of debts and bank penalties, which increases the total amount of debt by a multiple. According to experts, one way out of this situation is to take out loans to repay the amount taken.

To find the answer to the question of how to repay a loan with a loan, you need some important information. There is a term in banking law that means the full repayment of borrowings based on a new loan from a bank. If you understand the basics, you will need to take out a loan when refinancing or lending to repay another loan.

Main benefits of credit

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  1. Refinancing helps the bank’s customers get out of the enslaved financial problems to correct the mistakes they made earlier.
  2. This type of loan repayment actually extends the repayment period without any financial loss.
  3. With the chargeback, the borrower can significantly reduce his mandatory monthly payment when repaying the debt to the bank.
  4. If you carefully study all bank loan programs in a country before taking out a loan to repay a loan, you can even reduce the principal of the debt.
  5. Refinancing can help you avoid fines and penalties for not paying the debt.
  6. This option of paying debt helps avoid litigation that takes a lot of time and nerves.
  7. Before repaying a loan with a loan, you can choose a bank with the most favorable terms. 

What you need to consider before signing a refinancing contract

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Before repaying a loan, carefully review the primary loan contract. Banking policy provides for special programs that help repay debts with an additional loan. The possibility of refinancing is often set out in the contract itself. It occurs after a certain amount of time has passed. The duration of each bank before the conclusion of a refinancing contract differs. The average term is six months, but other options are possible: three months or one year.

The management of the bank itself is interested in the fact that the repayment of the borrowed amount has been fulfilled. Therefore, the terms of the loan program offer the bank’s borrowers the opportunity to meet the determined debt payments by lowering interest on the main part of the loan, extending the loan term and other loyal programs.

Before a quick repayment of the loan, the contract must be read carefully.

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Refinancing is not suitable for all loan contracts. For some of them, this method of repaying the debt tends to be irrelevant.

There are some banking program institutions that do not allow early repayment of the loan body. Therefore, this possibility must be clarified before signing the documents. Bankers argue that there are credit programs that do not make changes to the debt payment schedule.

In such cases, the refinancing contract is not useful. There are also banks where there is a commission for early repayment of the loan. These details need to be clarified. In 2011, the law prohibited the use of this method of calculating interest, but it is still considered a kind of hidden commission.

Can the loan be repaid early and what are the benefits of early repayment?

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The early repayment of debts has many advantages. First of all, they relate to the psychological condition of the debtor. When the amount borrowed is given in full, the person feels much more comfortable and free. If you analyze the payments, early repayment of the loan automatically reduces the borrower’s principal debt by reducing the accrued interest.

An important advantage of debt repayment is that the money saved is invested in a profitable business and cannot be paid to the bank. In most cases, early repayment of the loan is beneficial for customers, but not for banking institutions. You lose unpaid interest on prepaid loans.

Until 2011, many banks generally provided large amounts of commissions and fines for prepaid debts. Legislation has now improved loan terms to borrowers, but there is still a moratorium for a period of six months, a year, or at least three months for early repayment. It is possible to clarify the duration of the ban in any bank in the loan agreement before the loan is repaid.

Refinancing consumer loans

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Consumer loans take much longer than larger debts, but at the same time, they are not very beneficial to the family budget. You may have seen a loan interest rate that is much lower than that of your bank, which can be an incentive to refinance. It often decreases after a while.

This can be seen as a certain risk for the borrower who has borrowed the amount on less favorable terms. For example, your private bank credit will be issued. In order to repay a loan in advance from this financial institution, you need to deduct the loan contract.

If it is possible to refinance on more favorable terms, it is sufficient to issue only a standard document package to reduce the interest rate. If you decide to get a new loan from another bank, you will need to collect additional documents.

Where to apply for a small-loan?

It’s easy to apply for a small-loan

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It is common that from one moment to another, an unforeseen expense arises that we should cover with priority, even if we have very far from our collection date or the planned income. Faced with these expenses, banks or lenders were the ones offering the help of money loans, but it was not always a fast or viable option.

Therefore, the financial institutions and the Lite lender loan pages were created, which with their efficient mini-credit system, present a very fast, secure process, with high approval rates and a fully Lite lender management, avoiding the need to resort to commercial premises, offices and others.

The quick loan pages offer amounts up to $ 900 in less than 10 minutes, so it is not difficult to obtain credits of considerable amounts in record time. Its main characteristics are its speed, the simplicity of its procedure and the flexibility in terms of requirements.

Through quick mini-credits it is possible to get a considerable amount of money without the need for payrolls, guarantees and even, some loan pages offer their services even when the user belongs to the Financial Credit Institutions delinquent file.

Applying for a loan and receiving a quick response, under a transparent contract and a totally Lite lender process, is now possible with quick loan pages, which free us from the worry of paperwork, extensive lists of requirements or denial for no apparent reason.

Next, we will present you with the most recognized loan pages for their excellent management, as well as for providing high amounts of money, with good repayment times and low interest rates.

Small loans, great solutions

Small loans, great solutions

In addition to these 6 recognized loan pages, there are other large Lite lender financial entities that contribute and improve the economic situation of Spanish citizens, giving them the push they need to get out of an unexpected expense. 

Without a doubt, the best and fastest way to get mini-credits is with some of these Lite lender platforms, which with their system allow fast and free management of overwhelming paperwork, transfers, large requirements and annoying borrower interviews.