Widespread advertising, availability of services of microfinance institutions (MFIs) and financial illiteracy of the population have led to the fact that many people not only live due to loans but also have 2 or more such outstanding debts and cannot return the borrowed funds within the specified period or are in the so-called debt pit.
The reason for this situation lies in the fact that many consumers have no idea how to choose a loan or a microloan, when they should take it, and when the loan should be abandoned.
Capital and risk management
It is best not to borrow or take out a minimum loan and only in extreme cases. Before you take the credit, even if it is only a couple hundred dollars to paycheck or the microloan on the card, you need to understand when and how much you will return clearly. You just have to plan your budget in accordance with the payment schedule, so as not to delay the loan and not to pay interest. Never take the amounts that you really cannot give, and that does not fit your financial income.
You should always remember about force majeure. In other words, take out a loan only if there is no other way and only the amount that you will return. But at the same time, find out the conditions of prolongation, fines, and penalties in case of unforeseen circumstances.
Buying unnecessary and living beyond your means
One of the main problems with loans is that loans are very easy to get. Moreover, it is easiest to obtain payday loans…