How to pay off your debt and get to keep your house in the process – A guide to debt consolidation methods
A personal loan can be an attractive means of getting back on your feet after a rough financial period, or getting through tough times when unexpected expenses occur. However, there are still many people that are scared of taking out a loan, especially a secured one, because they might lose their house. It is indeed a legitimate concern for someone that doesn’t have a strong financial background. The possibility of losing your home, car or other assets because you didn’t manage to pay in time, that’s scary. With all that in mind, taking out a loan can still be done, and paying it off can also be accomplished without losing your assets put down as collateral. Here are some important tips on how to approach a loan, to avoid such consequences.
Get your finances in order and gather what your financial status is
Before you get into any kind of loan discussions, you need to evaluate your business or personal finances in determine where you stand. This will help you make better, educated decisions later on when you are ironing out the details of your loan. Whether you want to take a loan for personal needs or a business loan, knowing how much your business is worth for instance will help a lot.
Only take as much as you need, not a penny more
The problem with many borrowers is that they think it doesn’t matter if they take an extra something on their loan. For instance, if you need exactly $104,000 for your business, don’t make the mistake of rounding it up to a $120,000 loan. The amount it adds to your monthly pays might seem like nothing now, but things can take a turn for the worst and it could be your doom. Take exactly what you need because you will have an easier time paying the loan off but also get smaller interest rates.
Business loans take priority, and you should keep business and personal separate
If you have a business, and have both personal and business loans, the business related payments need to have priority. The consequences for missing on a business payment can be much more severe than a personal one, not to mention that you might have some personal assets tied to your business loan. That brings us to another thing you should keep in mind, which is that you should never mix personal and business matters. Keeping the two distinct spectrums of your life separate is how you avoid getting tangled up, with a headache.
In conclusion, prioritizing debts based on severity of consequences, being temperate about the amount your borrow and making sure multiple loans don’t intertwine, is how you can help yourself substantially when it comes to paying off debt without losing your secured assets.