The biggest dangers of a loan

Lenders and loans prefer to screen with the benefits that their products bring, such as:

  • being able to finance your own house,
  • being able to pay anywhere on earth with a credit card,
  • can change your existing home into your dream home,
  • can purchase a new car.

Entering a credit can also entail a lot of dangers. Just think about the financial problems that you face when you cannot pay back the money. By getting into debt, phenomena such as tensions, stress and depression can quickly come to the fore.

Lenders make money from lending money

Lenders make money from lending money

In today’s society it is very common to borrow money and is often done by the majority of the population. Most people don’t really think about the dangers of taking out a loan or credit. A lender always charges certain costs and an interest rate when you take out a loan or credit. For the borrower, borrowing money in the longer term therefore always means a financial loss.

Loan conditions are crucial

Loan conditions are crucial

The borrowing conditions (the small print) are crucial if you want to borrow money. When taking out a loan or credit, you must therefore always carefully read the loan conditions. After all, the disadvantages of their products will usually be less prominent for credit providers. By carefully reading the fine print in the loan agreement you can learn everything about:

  • the interest that you ultimately have to pay on a loan or credit,
  • the duration of the loan or credit,
  • the cost percentage of the loan on an annual basis,
  • the consequences if you fail to pay the loan or credit.

Dangers of a loan or credit

Dangers of a loan or credit

The most serious danger of a loan or credit is that you are not well prepared for its repayment and you have therefore not looked realistically at financial means and possibilities. In such a case you run the risk of not being able to repay the borrowed money and you will end up in financial difficulties even more.

If you can no longer bear the monthly costs of a mortgage, you can end up in serious financial problems. In such a situation it is best to contact the lender and find the most favorable solution together, such as:

  • delay the repayment of the loan or credit,
  • postpone repayment of the loan or credit.

However, this will not be easy because the lender itself is subject to strict rules with regard to mortgage conditions. In the worst case scenario, the lender will require you to leave the house so that it can be sold. By selling your home, the lender can reclaim the borrowed money.

You get into debt

You get into debt

If there is a default, you not only get into debt, but this can even be the start of a downward spiral. If you cannot properly repay existing loans or credits, it is certainly not a good option to take out new loans to finance these debts. You better prepare a debt payment plan in consultation with the relevant creditor (s) and also ask for a deferment. If this is not possible and you really don’t like it then you can always turn to an expert in the field of debt counseling from the Debt Mediation service of the OCMW.

You become depressed

You become depressed

The consequences of default when you have taken out a loan or credit are underestimated or overlooked by many people. Your private life can suffer greatly if you can no longer pay your debts and you end up in financial difficulties.

As soon as a loan or credit cannot be repaid and you are evicted from home, this has serious psychological consequences. Your self-esteem can be severely affected by this. This is certainly the case if other setbacks have come your way prior to eviction, such as a dismissal or divorce. Your self-confidence will then have a hard time and negatively influence your relationship and your family situation. Tensions, stress and depression are therefore common complications that can manifest themselves with financial problems.

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