If you have a loan you may feel a little stuck. You know the loan wasn’t a good idea, due to the interest and time limits, but when you need money fast, these reasons don’t really enter the mind. All we see is a way out of a financial struggle, however temporary, and loan providers know this, which is why they have us by the short and curlies!

We can’t change the fact you took out a loan but we can make it better. In fact, with help from MoneyNerd, you may find a way out altogether!

Loans are particularly nasty as they roll on month to month, and so it feels as though you’ll never escape this high interest trap.

Here’s what not to do when you have a Loan.

Don’t Just Pay It Without Question

You know you need to pay back your loan, and you’re probably scared of the ramifications on your credit rating if you make a late payment, however, don’t pay the fees blindly. Admin errors cost individuals on average £200 per year, simply because we don’t check our bills or receipts. Make sure you know how much you should be paying back and ensure only this is taken from your bank. There could be a miscalculation and you could be paying back more than you need to.

Don’t Ignore It

On the other side of the coin it’s best not to ignore demands from loan companies. This can cause matters to escalate quickly. Even if you’re in a dispute, until a court orders you not to pay, keep opening the letters and keep paying the monthly installments. One missed payment could result in court fees, higher interest and negative effects on your credit rating. Communication is key at every stage, even if it’s not positive communication, it’s important that you keep those lines open.

Don’t Take Out Another Loan

The loan trap is such that often borrowers have no choice but to take out another loan as money runs out more quickly throughout the month. If you can avoid this in anyway, please do. Consider borrowing off friends and family, it’s not ideal but it will release you from the trap and you won’t have high interest charges. See if an overdraft can help. Look into all the benefits you’re entitled to. You could even swap energy providers to earn cash. Return your old mobile phones for money in the bank. Almost every other option is better than taking out another loan.

If you are in this situation, you’ve come to the right place. There’s no need to suffer any longer. MoneyNerd has been where you are and found ways to escape the trap. There is an interest free shining light at the end of this tunnel.

About the author

Scott Nelson

Scott Nelson is a financial services expert, with over 10 years’ experience in the industry, including 6 years in FCA regulated companies. Read more
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