How personal loans can reduce your debt
Personal loans are increasing their popularity as a means to consolidate debt as Mexicans begin to shy away from credit cards and their high interest rates. Personal loans – or even cash or quick money loans – can usually be easily arranged online with the payment made to your bank account in just a couple of days.
It is an attractive option for people who want to have their finances organized, but it only really works, if the borrower honestly analyzes his spending and financial habits. So do not exhaust your credit card as soon as you get a personal loan, because all you get is having to start over.
How debt consolidation works
Debt consolidation using a personal loan is a relatively simple concept. Let’s say that you have a debt in the credit card of 1000 pesos and you are paying a new television that is worth 1500 pesos thanks to the credit of a store. The interest rates on those debts are going to be high, and if you do not monitor your finances, it may be very difficult to make the repayments, especially since the cost of living continues to rise.
Using a personal loan can return those debts with a much lower interest rate. So you can ask for a personal loan of 2500 pesos, use the money to repay the debts of the credit card and the store, and then have to make a single refund that does not affect your pocket as hard.
The advantages of personal loans
One of the biggest attractions of personal loans is their affordability. The lower interest rates mean lower returns. It can be quite simple to accept the request for a personal loan as many credit institutions have simplified the process – it can even be done online. You will have to meet certain criteria, such as having a good credit history and a regular income. Personal loans are also attractive because they have fixed terms for their repayment, and you know exactly how much it will cost you throughout the life of the loan, which is usually quite short.
Personal loans Vs credit cards
Mexicans there is no doubt that they have a love story with credit cards with billions fused every year on cards. But these credit cards come with much higher interest rates than any other form of loan. According to the Canstar CANNEX research group, consumers are becoming aware of this, as there has been a significant change in personal credit cards.
Canstar CANNEX states in its report that “Statistics reveal that more and more people are choosing security and the value of a personal loan instead of a credit card”. “People continue to combine multiple credit card debts into a single personal loan – a positive sign that real efforts are being made to reduce personal debt in a disciplined way, rather than succumbing to the return payments of credit cards. credit constantly struggling with the regular temptations to spend with the credit card. “
This change can bring significant savings. A debt of 2000 pesos on the credit card, which costs about 18% interest, can incur a cost of 1200 pesos in three years. A personal loan of around 10%, in the same period will have an associated payment of about 320 pesos in interest – which means saving almost 900 pesos. Therefore it makes a lot of sense to consolidate your debt, using a personal loan. It’s a really fantastic way to get your finances back, and get out of debt.