Debt can be a headache, especially if you’re over your financial capability. If this situation occurs, you may be able to negotiate to increase the loan period. High interest rate could overwhelm you to pay off your debt. Do you know what bad credit is? The bad credit is a condition when the borrower is no longer able to pay his debt.
On the other hand, the interest on the loan from the bank will continue to run and its amount is crawling up. This condition makes the total loan get bigger and more difficult to pay off.
Avoid Bad Debt
Bad loan could be a terror to the debtor. However, borrowing money doesn’t mean something scary as long as you can manage yourself to do all your activities in a proper way. Here and now we’re describing some principles that you should take if you want to be good borrower.
Borrow in Accordance with your Capability
The thing to remember when trying to apply for loan to anyone, especially to the bank, is your income. Don’t make your loan exceed your financial capability that means there must be a budget allocation of the total income for other needs during the period of debt repayment. Recognizing all the needs that must be met helps you to not violate your ability. Make sure all installments no more than 30 percent of total revenue. Just make sure every loan made useful, not just to meet your consumptive lifestyle. We encourage you to be more prudent in applying for a loan to the bank.
Ask the credit that was used to meet a critical need to improve the quality of your life. For example, take a mortgage on a particular bank to buy housing coveted over the years. This type of credit is obviously very useful to you as property prices are becoming more increased rapidly. The increase in property prices is likely to exceed even high-interest mortgages.
Get Rid of the Bad Debt
If you get bad credit status, then you do not need to panic. Stay calm and cooperate you’re your bank. Do not get away from their calls because it only adds your problem. Avoidance will only give a bad assumption that you do not have an intention to repay the loan. You need to consult the bank and tell them your problem. You may ask for debt settlement as one part of restructuring methods as this method is recommended to solve your credit problem. Restructuring is an effort that can be done to improve the credit of the debtor or borrower. Improvement can be made because the borrower has a big trouble in making the payment. In general, there are some types of restructuring may be given to borrowers who are in bad credit condition. You might also use rescheduling method. The method is very effective that you ask to the bank to adjust your loan tenor. The tenor extension will be tailored to the debtor’s ability.