General Information

Getting out of Personal Loan (Signature Loan) Trap

It’s never been easy to escape from the debt trap. Debt is a disease. People borrow money to fuel their status life style and ultimately one day when they wake up in the morning, they find themselves in a deep debt up to their eye balls and from that day they can’t stop working.

Let me give you an Example of my recently married friend. He has borrowed money during his marriage for expensive shopping and to look cool and rich. He scratched all of his credit cards and taken a huge personal loan. Today almost a year after his marriage he is still repaying that debt. and recently he started defaulting in his personal loan payments because they come with higher interest rates.

This is the scenario of many people. Means they take personal loans to fuel their status life style and ultimately caught into a debt trap. Here are few things that you can do if you find yourself trapped in a Personal Loam Trap someday -

01) Monetise your assets such as Car, Home, Insurance policies, stocks, bonds, FDs, Mutual funds, Gold, Real Estate…etc… to get rid of this debt. I mean to say that, sell some of your assets to repay all of that debt at single go. I know that you will feel very sad while selling your assets but believe me it’s worth it. The Best investment is repaying your debts. If you repay all of your debts, you can later on build those assets anytime.

02) Consult Financial Advisor – This is the another option. If you don’t know how to get out of this trap, it is better to consult a good financial advisor. He will advise you that how to get out of this bad loan.

03) Go for Debt Consolidation – This is the option for many people. Here all of your debt portfolio components are combined by one lender and than you have to pay just one monthly installment which is relatively lower than all your combined payments over a longer tenure. In other words, all of your loans are converted into a single low interest rate loan typically backed by your home and than you have to pay only one installment per year.

However, it is always advisable that, you stay away from this worst type of loan. Remember my words,

“Nobody ever goes broke that doesn’t owe Money”