There are different types of loans that one can take. These include mortgage loans, credit cards, car loans, unpaid home bills and student loans, among others. Whichever your loan type, it gets very hectic and depressing when it comes to repaying them, mostly when you are short of cash. Which is why at Money Trumpet
we can’t stress enough to only borrow when you can afford to pay it back.
Some creditors, primarily big companies, have strict methods of collecting debts that may make it more challenging to hold on to their money. It’s, therefore, essential to learn how to handle your creditors in the best way possible.
In case you have more than one creditor, manage them in terms of priority. You may want to prioritise loans that involve your home since creditors may decide to take all your possessions and leave you without a home. Generally, any loans involving your house, including unpaid electricity bills should be prioritised then followed by other pending debts such as taxes.
What is the best way to deal with creditors and keep off stress?
Understand the Loan and Credit Policies
First things first, before taking a loan, ensure you know more about the creditors. It is usually advisable to get loans from reputable companies. Get insights from previous clients to understand how legitimate the creditor is. After that, inquire about your loan of interest and make sure you take note of all the details given. Most people go wrong by not understanding the type of loan they take. A loan has interest rates
and different policies of payment and non-payment. Such information is crucial and can make or break you.
For example, if taking a loan means you are subjected to unlimited liability, then once you are unable to pay back, the creditor is within their rights to sweep your home off all your belongings. If this is not a policy you are willing to adhere to, then it will end up being a great mess, if, at this stage, you do not understand the stakes of not paying or making a late payment of a loan.
Documents are Important
Taking a loan from creditors is usually a process, and a lot of documents are involved. It is essential to keep all official documents safely just in case you need them in the future. When you delay in making payments, the creditors will send you an email or letter to remind you of pending payments. Keep those documents or email correspondences. If you decide to write back, and in turn, come to an agreement that involves a later payment, keep all the exchanges.
Avoid making agreements via phone calls or face to face exchanges. Having agreements written down is important mainly because documents are used as evidence of a bargain between two or more parties. If a written contract does not exist, then the agreement between the two parties did not occur. This is usually hurting to the one who takes the loan since most people assume that documentation is present. Documentation and email correspondences, as well as payment receipts, are important for keeping track of how much money you have paid at a particular time.
Sometimes there might be calculation errors from the creditor’s end, and you end up paying more than you should. However, if you keep track of all the payments you make by storing payment receipts, you can know how much money is left and how much is cleared.
The Credit Reference Agencies
When you pass the payment date, a creditor may decide to extend the period. Depending on their existing rules and policies, they may end up reporting you to one of the credit reference agencies such as Experian
. When this happens, your credit score will be rated low, and it will become hard to get a loan elsewhere. Keep checking your credit report to see your current score. If something is on there that shouldn’t be you can take steps to have it removed.
It may also be that someone stole your identity, borrowed and defaulted payment, hence your low credit scores. In this case, you can report the matter and also contact the creditor in charge to follow up on the error. If the credit score is genuinely low, then you know what debt should be a priority.
If need be seek external help
If it really is becoming too much seek help from the citizens advice or www.moneyadviceservice.org.uk
, they can help to negotiate safely in most situations. Once you involve these, then you close all room for mistakes. Your advisor will go through creditor’s policies and advice you on the best course of action. Why should you involve a third party? The reason is that agreements and policies can get a bit more complicated add this to the stress of being in debt having someone in your corner can really take the pressure off.
Remember there is light at the end of the tunnel and once you get you have everything under control you’re feel so much less stressed.