We all know that in financial matters there are no magic solutions, we must sit down and analyze each variant that can change our daily situation. From Good Finance. We leave you three tips that will help you control your loans and make better decisions in your finances:
Know the calculation of your loans
Life insurance, VAT on interest, administrative expenses: all of these are costs that derive from the loan and therefore must be computed in the calculation of the total rate paid for it, known as the Annual Effective Rate (TEA).
There are some financial entities that, in order to attract new clients, usually report the cost of loans in terms of Annual Nominal Rate, which does not take into account the items mentioned above. This is because these costs would not exist in case the loan is not granted. However, they are significant in the total cost. For this reason, it is always convenient to analyze whether or not we take a loan taking into account ALL the associated costs.
This is why it is very useful to calculate the loan using a simulator. In this way, you will be able to know before taking the loan what you are going to pay and how the fees are going to be. Be sure to work with a company that is transparent to avoid having surprise expenses, so you can control your loan .
Destine an untouchable amount for your debts
It is important that when you take a loan, you make sure to return the agreed amounts in a timely manner. For this reason, when putting together your budget, allocate an untouchable part to cover your debts . This will help you to have the payment solved from the beginning of the month. When you have the money in hand, divide it among the most important expenses (food, transportation, rent and cancellation of your loan).
Even if you do not cancel it in its entirety, you will gradually reduce the amount owed. In addition, you will avoid more interest and even, perhaps, this action will help you have a better credit history. Remember that the credit history is the record that will determine in the future if they can lend you money again or not, since there it will be reflected if you are a good payer.
If you find yourself in trouble paying your bills, we recommend that you put priorities: First allocate money to those accounts whose interests are higher, because the higher the percentage of the payment that goes to the financing cost. If high interest loans are canceled soon, more cash may be available to pay other bills.
In this way, you will first pay the accounts that generate more interest if you delay paying them. This way you will avoid allocating money to pay your financing.
Have you already implemented these tips to control your loans ? Tell us how it went!