Taking out a loan may be the only alternative for those who are in debt, have lost their job or have had an emergency expense. You need to know where and how to get credit so you don't sink deeper into debt.
Before anything else, know that a loan is always a last resort, and should only be used in emergencies or to exchange an expensive debt for a more affordable one. A line of credit is not worth paying interest to the bank for something that is not urgent, such as renovating your home or traveling, for example.
Below, check out tips for getting into debt in the healthiest way possible and preventing your loan from snowballing:
1) Choose a payroll loan, but do your research before signing up
After financing for real estate and cars, payroll loans are the type of loan with the lowest interest rates on the market. This type of credit deducts the installments directly from your salary or INSS benefit, so the risk for the financial institution is low.
2) Look for cheaper loans to refinance debts
You can take out a loan with lower interest rates to pay off a more expensive debt. “This won’t reduce your debt, but it will make it grow at a slower rate,” explains Marcela.
Only those who are salaried or receive benefits from the INSS can take out a payroll loan. If this is not your case, the next best option is a personal loan, before paying for purchases in installments with interest, using an overdraft or paying off your credit card bill in installments.
3) Beware of online loan scams
Keep an eye out for online lending sites and apps, which have spread rapidly in recent years and promise to charge lower rates than traditional banks.
When taking out a loan from a bank correspondent, try to find out who the bank or financial institution is behind the credit offer and find out about its credibility online.
For other personal loan information, Click here.