10 loan mistakes that will make life miserable

2024 Author: Malcolm Clapton | [email protected]. Last modified: 2023-12-17 03:44

It is better to be very careful when applying for and paying off a loan.

1. Do not read the contract

Usually the manager gives a stack of papers for signature, written in not the most understandable language. It is long and dreary to understand the text, especially since it looks like a typical one. Therefore, the client bravely signs it - and makes a mistake.

It is always important to read everything you sign in its entirety. This also applies to credit agreements. If you applied to a decent institution, the bank is unlikely to decide to cheat you clumsily (although this is not excluded). But there are still many nuances to watch out for. For example, for which the bank will charge fines and penalties, or in what cases it may require the entire amount to be returned ahead of schedule.

If something in the contract does not suit you, the manager is unlikely to allow you to make edits to the document. But you can always choose another bank.

2. Get a loan for someone

Sometimes, for various reasons, someone cannot borrow money and asks a friend to do it for him. The person swears that he will repay the loan himself. Sometimes it happens. But it happens that people do not keep their promises. Only the bank will not care why the payments stopped coming to the account. The organization will unleash its anger and fines on whoever is specified in the contract as the borrower.

Human relationships are very unstable. Therefore, it is worth taking a loan for someone only if you are initially going to return the money yourself. And it is not worth participating in muddy schemes with loans - this is too expensive an experience.

3. Borrow too much

When a person has 30 thousand, he is guided by 30. But if he has nothing and he takes a loan, often interesting begins. You can take 30 thousand, and 50, and 100. And sometimes a person spends much more than when he would dispose of his own money.

They say that with loans you spend other people's money, and you give back yours.

And so it is. If the item is too expensive and the loan amount is too large, it will take a long time to return the funds. Therefore, it is best to spend your loan money carefully and not exceed a reasonable budget.

4. Choose an uncomfortable payment

The more you return to the bank per month, the faster you will close the loan and the less interest you will overpay - everything is correct here. And often people try so hard to pay off faster that they go too far and choose a completely unaffordable payment. As a result, there is no money left for the most necessary things, and the return of the loan turns into torture.

Usually, a comfortable payment should not exceed 35% of all income. But here a lot depends on how your expenses and income are compared in principle. After deducting the monthly payment, you should save money for everything you need (food, travel, utilities), plus a little more - for pleasures and unforeseen expenses. And if something remains, you can always use the money for early repayment of the loan.

5. Focus only on the interest rate

In pursuit of low interest rates, you may not notice other little things that can significantly affect the final costs.

The most obvious example is mortgages. In 2020, rates on home loans have dropped significantly, while apartment prices have increased. As a result, the total costs of home buyers not only did not decrease, but even increased.

Sometimes a lower interest rate is offered only in a package with insurance, sometimes - with other additional conditions. It is strange not to pay attention to them.

6. Not to comply with the terms of the contract

In the first paragraph, we discussed how important it is to read the document. But this is not enough: it is necessary to execute what is written in it. Otherwise, there will be consequences.

For example, the agreement may indicate that in case of two payments made later, the bank has the right to demand that the entire loan be returned in full. It is unlikely that you have such an amount, otherwise you would not have taken a loan. Or, say, if you do not extend some insurance, the interest rate will rise - also unpleasant. In order not to get into such situations, you must follow the conditions.

7. Inaccurate payments

Usually the date of payment is fixed. A person comes to the bank, and more often simply transfers money to the account from which they are debited to repay the loan. But there may be nuances here. For example, the situation with the weekend is ambiguous. Sometimes the money is written off clearly on the agreed date, sometimes - on the first working day after. If the funds are not in the account at the time when the bank tries to write them off, this may be considered delayed. As a result, this will result in penalties.

8. Do not check if the loan is closed

Sometimes a person makes the last payment and lives in peace with the thought that he has paid. But the bank has an underpayment of five rubles. The institution begins to charge this amount with fines and sanctions until it turns into thousands. And then the borrower finds out that, it turns out, he owed the bank and ruined the credit history as a malicious defaulter.

To prevent this from happening, take a document from the manager, which clearly says: you have repaid the loan and the bank has no complaints against you.

9. Take out a loan to pay off another loan

There is an important nuance here. Let's say a person has a loan at 14%. He regularly makes payments, but suddenly he found out about the possibility of taking a loan at 8%. In this case, it is rational to get a new loan, close it with a more expensive one and save on overpayments.

But this does not work very well when everything is bad, there is no money, and a person simply takes more and more new loans, plunging into a hole in debt. Credit, contrary to popular belief, is not for people without money. This offer is for those who have funds, but not right now.

10. Ignore delays

Anyone can get into a difficult situation. It happens that at a particular moment it is impossible to repay the loan as before. It's a bad choice to let things go. The debt will only increase due to fines and penalties. It is much better to resolve the issue jointly with the bank. It is more profitable for an institution to get your money in any way than to lose it at all or sell the debt to a collection agency for a cheap price. Perhaps with the help of negotiations it will be possible to reduce the monthly payment or agree on another softening of conditions.