Today, many households have to resort to loans in order to be able to make projects or cover certain expenses. With the help of the crisis, many are also falling into over-indebtedness. How to avoid this?
Borrow on good terms
In order not to fall into over-indebtedness, it is important to choose the credits which one subscribes well. Indeed, you could have to take out several credits at the same time, and if they are all credits at outrageously high interest rates, you risk easily falling into the trap of over-indebtedness. To find credits with the best conditions, it will be useful for you to have a good credit file.
Before taking out any credit of any kind whatsoever, think about taking care of your borrower profile. For example, wait until you have stable income, do not display bank overdrafts in the past few months, and be able to hire a significant level of personal contribution. Thus, you can easily find mortgage loans whose repayment will not be too expensive.
If necessary, call on a mortgage broker to advise you and guide you to the best offers on the market: his experience and knowledge of the market will be important assets in finding the rare pearl.
Do not accumulate credits
Of course, credits can provide some help in difficult situations, or to carry out certain large-scale projects. However, it is important to only take out loans that are up to your possibilities. For example, it is not advisable to take out loans while still having several in the process of repayment.
Indeed, this can disrupt your financial management: by dint of juggling between the different repayment durations, the different monthly payments for each loan and the other parameters, you can easily get lost in your calculations and your estimates as to the real budget from which you benefit. in the month.
You should know that credit default is not only due to a lack of income, but can also result from a poor organization of the household budget.
Borrow without excess
To avoid over-indebtedness, there is nothing like borrowing without excess. Indeed, it is the fact of going into heavy debt that a household can no longer honor the repayment of all its debts. If you need to take out a loan, make sure you do not already have more than one loan outstanding. Obviously, you can take out a few credits at the same time, provided that it still fits into your budget.
To determine this, the 33% principle must be used. Indeed, it is recommended not to go into debt more than 33% of your income so as not to risk falling into over-indebtedness. The calculation is not difficult: if for example you have an income of 3000 USD, your repayment capacity is therefore 990 USD.
If you have already taken out a loan to be reimbursed up to 350 USD per month for the purchase of a car for example, you will therefore only have 650 USD to spend on any other credit. If you therefore come across a loan whose monthly payments exceed this amount, know that the risks of over-indebtedness will be significant.