A lot of time has passed since the first microloans and microfinance organizations appeared. Many have already appreciated the noticeable advantages of personal loans in certain situations. If you urgently need money, then a personal loan is a great option.
A sudden breakdown of a car, replacement of broken household appliances and an unexpected replacement of water meters (gas, electricity) or loss of work…All this knocks out the financial ground from under our feet! Not all and not even many make savings for such cases. Whatever the personal emergency will help you get emergency money immediately.
A personal loan will soften the financial blow by quickly providing the required amount. In general, lending allows you to increase cash flow and provides some financial flexibility. Still, a personal loan is not suitable for all situations.
If you have a difficult situation with long-term loans (bad credit history and a low credit score, and banks refuse to receive a loan), then the situation can be saved by a personal loan. It happens that the amount of payments on several loans significantly exceeds the payments on a personal loan. A reasonable way out would be to take “quick money” to close current payments. This will avoid late payments and increase your credit score.
2. No Certificates or Other Guarantees
Personal loans do not require the provision of certificates of income or property as collateral. In case of systematic non-payment of payments on a secured loan (auto, consumer), you risk losing the collateral. It is worth noting that due to the lack of a loan repayment guarantee, the interest rate is noticeably higher.
3.A Way to Survive Until Salary
With a low credit limit on your bank card, a personal loan along with payday loans online can also help you stay solvent until your paycheck. However, the desire to “grab” money before an advance or salary can be a problem given the hassle-free way of obtaining a loan. Easy money is accompanied by high-interest rates and additional payments. Without noticing it, you can get into a vicious circle.
A sudden breakdown of expensive equipment, such as a refrigerator, washing machine, or heating boiler at home can be a serious problem for those who do not have any savings in their accounts. A personal loan will be the ideal assistant for you.
In general, it is not the smartest decision to take a quick loan for a long-planned vacation. Still, it is perfectly acceptable in the case of a honeymoon or similar occasions. As well as helping to a wedding celebration or helping to travel around the world, a personal loan will be a suitable solution.
If There Is Nothing to Repay a Personal Loan With?
Soberly Assess the Situation and Do Not Make Rush Decisions
- You still continue to pay on time but you understand that there are a lot of debts and all the money is spent on paying them. You expect that the first delay in payment will come soon.
- You were laid off at work, or you quarreled with your superiors and resigned of your own free will. In search of a new job, you understand that you will not be able to make the next payment for a personal loan. You are frightened that soon they will start calling the numbers of people close to you that you indicated when receiving loans.
- You have already missed several payments and are now looking for a way out of this situation. Already your loved ones (friends, neighbors, relatives and employer) are being cut off by collectors and employees of the collection departments of banks.
- You do not pay for more than six months, your credit history is damaged and creditors start going to court. You are afraid of the court, a visit to your home by uniformed officers (bailiffs) who will describe the property in the presence of attesting witnesses (usually neighbors).
However, you need to act decisively with the more solutions you have.
Choose Several Options for Getting Out of Debt:
- Borrow from friends, colleagues and acquaintances for the next loan payment. We recommend this option only if you have a short-term interruption in finances. Therefore, you will be able to repay the debt in 1-2 months. Thus, you can continue to pay personal loans according to the schedule. Soberly assess whether this is so before borrowing from friends and work colleagues.
- Take a new bank loan or personal loan to pay off old loans. We recommend using this option only when the new personal loan is fully used to refinance (pay) the existing old loans. As a result, the monthly payment and the interest rate become lower. Otherwise, this option does not solve the problem but worsens it.
- Refinancing loans. This is the first thing to consider when you realize that the monthly loan payment has become unbearable for you. Moreover, you can combine loans into one (refinance them) only if:
- you have a good credit history (previously you did not have overdue loans for more than 3 months);
- you do not have loans from microfinance organizations (“quick loans”);
- you are not overdue yet, or you missed no more than 1-2 payments on schedule.
In addition, most banks do not provide refinancing if you do not have a stable white income sufficient to pay for a new (refinanced) loan.
- Credit holidays. Most large banks can provide you with credit holidays if you do not have a “critical” payment delay for a period of more than 3 months. With each bank in which you have taken out a loan, you will have to negotiate a “credit respite” individually. We recommend this option when your main credit load is in several large banks. Credit holidays usually mean exemption from the payment of the principal for a period of 3 to 6 months as you continue to pay interest on the loan. In rare cases, banks completely exempt you from making monthly payments including interest.
Microfinance solutions are great helpers in the short term. However, in the long term, they can lead you to a deep personal financial crisis. Once you have found the right reason to take a personal loan, remember that you will have to repay it. A dream wedding, a long-awaited vacation, or a new refrigerator will burden you with debt repayment and even with interest. Therefore, it is worthwhile to be absolutely clear about how much money you will need to return, how long, and whether there are other options.