Tough times call for tough solutions. In many cases, people choose to compensate their holes in their home budgets with quick loans. Unfortunately, there will be a real debt loop
in the future for many of these people. These people will start to incur further debt to pay off their previous obligations and their debts will grow more and more. If you want to learn how to avoid falling into the debt loop
, first of all, you need to know the mechanism that causes it. Contrary to appearances, it is not difficult to fall into such a loop. You only need a few careless steps, sometimes even one loan for a purpose, which is just a simple whim and it turns out that there are so many debts that it is difficult to pay them off. Getting out of such a situation requires a great deal of self-denial. A popular saying is that prevention is better than cure, and in this case it is also better to get acquainted with the mechanism of the loop formation before than to break free from it later.
The debt loop - what is it?
The debt loop is a situation in which the indebted person takes subsequent loans to pay off previous liabilities. Despite the fact that she manages to pay off her previous obligations, her debt is growing. After all, each loan and each loan come with a commission and other fees, which consequently mean that we have more money to repay than we borrowed. By borrowing $ 100, we can finally have up to $ 200 to be repaid. In the case of higher amounts, for example $ 10,000, the borrower may ultimately have to pay up to $ 20,000. If he takes another loan to pay this liability, apart from those $ 20,000, he will have to pay additional money - even $ 40,000. Being in debt to repay previous loans causes us to fall into a kind of loop from which it is difficult to break free. The debt loop
concerns thousands of Poles. These people did not realize how difficult it would be to pay off these debts
. Nor did they know how to avoid falling into a debt loop
and were taking unwise steps.
Payday loans can lead to debt
Despite the many advantages that online loans have, you must be aware that this type of loan
can lead to a situation in which the borrower becomes absolutely insolvent and will get into a debt loop
. Surprisingly, it is not difficult to lead to such a situation. Online payday loans
can be taken in a few minutes. All you need to do is complete the application, send it to a loan company, and you can have the decision and money on the same day. The ease of taking such a payday loan without BIK
makes it willingly taken by people who do not really have enough income to pay off the debt. Due to the lack of checking at BIK, i.e. the Credit Information Bureau, the loan company is not able to assess whether its potential client is solvent. He often grants payday loans to people who are not solvent. Not only that - currently payday loans for those in debt
are popular on the market, i.e. special payday loans dedicated to people who have debts in other companies and use these payday loans to pay off their previous debts. Such payday loans have very high interest rates, because the risk of non-repayment is high, and the loan company wants to be more secure in the event of non-repayment, and therefore the interest rate on payday loans
may be a threat. Unaware customers don't realize how not to fall into the debt loop
. For an unaware customer, a loan can be a simple recipe for falling into debt
. These types of loans taken by people who do not have sufficient earnings or do not know how to manage their budget can become a double-edged sword.
What to do to avoid falling into the debt loop?
Prevention is definitely better than saving a tragic situation. If you do not want to run into debt and prefer that the debt loop
never applies to you, you need to think carefully about whether you really need a loan. In many cases, we take payday loans on impulse. We envy the neighbors of the new TV set, we envy our colleague's shoes from a world designer. We want to send our children on holiday we can't afford, or buy a better car, even though the current one is still quite good. These exorbitant ambitions, which we cannot really afford, drive people into debt.
The first step, and perhaps the most important step that will allow you to avoid falling into the debt loop
, is to actually assess your financial capabilities. We are a nation that likes to show off and or have too much of everything. This is what makes so many Poles fail to check how real their financial possibilities are, while these do not look too rosy. If you don't need to buy something because you don't absolutely need it, don't do it. Think realistically whether it is possible to pay off your debt
even if your financial situation deteriorates. It is better to question it a few times than look for a way out of the
Magdalena Mazur Twitter
She graduated from the University of Economics. She specializes in credits, loans and payday loans that can be applied for online. He knows the rules of online offers and is happy to write about them so that anyone interested in taking payday loans online knows what to look for.