5 Types of Debt to Avoid

We are all in debt to some degree, what with a mortgage to pay and car loans that enable us to have a decent vehicle and pay for the car over time. While the world does revolve around borrowing money, there are a few types of debt that you should avoid, and these include the following.

1. Credit Card Debt:

It is so easy to fall into the credit card loop, which results in paying all of your income to the credit card provider, which means you have to keep using the card in order to manage until the next payday. Many people have found themselves in such a situation, and with spiraling interest costs, the problem becomes worse, yet there is a way out, which comes in the form of a debt consolidation loan. 

Basically, this allows you to pay off all outstanding debts, leaving you with a single monthly repayment, and for many, debt consolidation enabled them to become debt-free. Check the statute of limitations on debt to know for how long certain types of debt can result in a lawsuit.

2. Unauthorized Personal Loans:

Loan sharks are always ready to prey on people who have financial issues, and if you are looking for a personal loan, rather than approaching an unlicensed money lender, you should talk to, who is one of Australia’s leading loan providers. This company can even help those with a bad credit history to obtain a personal loan, and they can easily be found with an online search. Loan sharks charge huge amounts of interest, and if you have a less than perfect credit score, you would be forgiven for thinking that a loan shark is your only option, yet there are online loan providers who can help.

3. Buying Luxury Goods with a Loan:

Luxury items would include any items that are non-essential, which might be a prestige car you set your heart on, or perhaps a home theatre system. If you crunch the numbers and realize that the purchase will stretch you financially, it is wiser to postpone the purchase until such time as your finances are a little healthier.

4. Taking Out a Loan to Finance an Investment:

Aside from a home loan, you should avoid borrowing money to finance an investment opportunity, as it very rarely works out that you make a profit, what with the interest on the loan. In the event you are not able to pay cash to finance the investment, you should wait until your financial situation improves before going ahead with the investment.

5. Borrowing to Pay Off a Debt:

Strictly speaking, borrowing money to pay off existing debt is not good business, and aside from a debt consolidation loan from an established loan provider, you should avoid borrowing to pay off a debt. You can get an online loan as a viable solution to solve your situation without any hassles.

If you are looking to obtain a personal loan, there are online loan providers that can help you, and with super-fast loan approval, the entire process can be completed online. Avoid borrowing money from any unlicensed loan provider, as you will likely have to pay a lot of interest, which accumulates over time.

 Read Also:

• Simple Ways to Settle Your Credit Card Debt
• 5 Ways to Get Short Term Loans in the UK

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