It’s common to think that multiple loans mean more risks, and it’s not exactly wrong to do so. At the same time, there’s an advantage to having multiple loans when handled correctly, especially in the long run. Maybe that’s currently your situation, and you’re wondering if you’re getting better at it. If that is the case, then check out these signs with yourself and see if you have them.
You apply debt repayment strategies
Multiple loans can be difficult to manage. That is why savvier borrowers apply strategies to make repayments easier:
Avalanche method
This is a method where you pay off your loans in order of the highest interest rate to the lowest, which saves you both money and time, This is because prioritising the biggest debts and interest rates first reduces what you will pay in interest in the long run. It also helps you speed up repayment and cut off the extra rates later.
If you already implementing this, then good. If you haven’t, then that’s okay. Now’s the perfect time to start doing so. Do note, however, that this method requires patience, as it may take time before you see good results and progress.
Snowball method
Alternatively, you can apply the snowball method of debt repayment strategy. This involves paying off the minimum on all your debts and prioritising paying off the smaller debts first. Once you have paid off the smallest debt, you can pay off the next-smallest debt faster.
While it’s not advisable, there is nothing wrong with only repaying the minimum amount, provided that you are doing so strategically and don’t spend excessively. This type of debt repayment also requires you to be more consistent and aware of the terms and possible completion of payment of each loan.
Consolidating all the debts
If you are thinking of consolidating your debts with a legalised money lender in Singapore, or perhaps already have, then perhaps you’re better at handling multiple loans than you think.
By putting all those debts into one payment, you will be on a faster track to a total payoff. You’ll also be able to save money in interest because you’ll be paying down the balance faster. Lastly, provided that you pay your consolidated debt regularly, sufficiently, and timely, it would increase your credit score.
You still have savings and emergency funds while handling all of those loans
Saving and emergency funds are important, as relying on loans alone will put a financial strain on you. Imagine if you meet an accident at a time when the remainder of your money after spending on needs goes to the repayment of multiple loans. If you aren’t saving money or can’t do so, then that could mean another loan.
On the other hand, if you’re able to save money despite having multiple loans, it means you have good financial management and your finances aren’t trapped in debt repayment. This is true even if your income has increased, as many succumb to lifestyle creep and fail to save after starting to earn more.
Conclusion
Handling multiple loans is not easy, but it gets more manageable over time, as you develop the traits and methods needed to be able to. So, after reading this article, were you able to spot any of the strategies you apply and traits you have when it comes to managing multiple loans? If yes, then you’re on the right track, and you know what works for you, so keep at it. But if you still can’t see yourself in even just one of the points, then there’s no better time to start improving how you handle multiple loans than today.
