5 smart ways to manage loan accounts
You must first read all terms and conditions on which a lender is ready to provide you a loan. This is absolutely necessary because once you are done with your written agreement, both parties will be bound to follow it. The point is why we need a personal loan? Well, it can be used for different purposes like home renovation, business setup of some other domestic needs. There is another query asked by frequent people residing in UAE that how they can manage multiple loan accounts.
If you have multiple personal loan accounts, it doesn’t necessarily mean you’re going to get plunged in debt because one has a lot of options to handle these. With effective management, you can prevent debt from spiraling out of control but you have to make some smart moves. You might be tempted to take a small loan so that to control the loan interest from another account. Also, you can use it to pay off your monthly repayment amount on one or more of your loans.
This is a common thing nowadays that people have diverse personal loans bank accounts and a large number of families that have a home loan also have a car loan or a vehicle loan. The reason for taking such type of loans is that these loans are secured and safe. The lender in the case of a bank is totally responsible for such services and keeps one thing in your mind that this is two-way cooperation.
If we have a look at personal loans, these are available with higher interest rates in comparison to secured loans, why most of the borrowers still prefer it? The reason is the flexible repayment tenures and these schemes attract significantly lower interest rates than credit cards. The market today has a multitude of lenders offering personal loans including
- Private and public sector banks
- Private financial firms
Well, you can take personal loan interest rates in UAE with a little variation in schemes and competing for offers, enabling individuals to get a super-easy and instant access to credit. In this article, we will discuss the condition of handling multiple loan accounts. Don’t need to be worried about anything in case you have multiple personal loan accounts. It doesn’t necessarily mean you’re going to get submerged in debt. With effective management and guidance of a financial expert, you can prevent debt and extra interest rate.
The formula for debt consolidation
Let’s look at some proven tips to manage multiple personal loan accounts.
- Pay off your EMIs on time
The loan is all about few liabilities and if you could cover those on time, there would not be an issue. We advise all loan borrowers to clear their monthly repayment amount on your personal loan account before your credit card account. This is directly related to your credit card history and this is because defaults and late payments impact your credit score. You need to work with the banking sector in UAE all the time for different things and if you once get into a default list, your personal loan schemes can be quite severe, having the potential to reduce your score by a whopping 50 points.
2. Don’t create additional credit card debt
If you are dealing with your personal loan matters, try to avoid your credit card debts. The importance of this point cannot for once be understated because it is pretty critical and important but most of the readers ignore it. If you go on to create additional credit card debt along with your loan schemes, you will probably be in a dangerous situation. Despite having multiple loan accounts, you’re staring at danger in the face, because you would not have any alternative.
Although the UAE region is rich enough and residents can’t live without credit card services but the management part is always in your hands. In most cases, credit card interest rates hover at about 35-40% p.a. if you will not stop and keep accumulating more credit card debt. This thing will force you to make higher payments to your bank, leaving you with little in your pocket for the given month.
3. Close one loan and then move forward
It’s ok you have multiple loan accounts but once you are done with a system try to close that and then take another initiative. This wouldn’t be a great idea to indulge in maximum accounts without closing previously. Now this will solely depend on the number of loan accounts that you have like if you have insurance account, investment account, personal loan and other, try to manage in a smart way. If you have 2 accounts, you can manage to pre-close one of your loan accounts in a few months so that to focus on others.
In case you are dealing with 3 accounts, then try to work in a smart way so that to avoid extra interest rate. While you focus on pre-closing which is in favor of a borrower, make sure you pre-close the account with the highest interest rate. This would enhance your chances of getting a loan next time from a private bank in the UAE. Also, we suggest you to choose to pre-close your loan accounts before your credit card accounts.
4. Balance transfer or a debt consolidation loan
What is your understanding of debt consolidations loans? This is all about to get rid of your loan payments in a smart and easy way. The best way to get rid of debt from multiple sources is to get a debt consolidation loan from your bank. Instead of working with multiple sides, you can direct all debt towards a single source through this system. Keep one thing in your mind that not all banks will offer you a debt consolidation loan and in order to get one, you should have the following things:
- A good repayment history and a high credit score
- Proper documents with a good credit history
If we have a look at this system, debt consolidation loans usually come with slightly higher rates. This is totally different than personal loans because they are available with less interest rate. It is mostly top private banks that offer debt consolidation loans because they are always in search to grab the attention of high-net-worth individuals and big giants. So, check with your bank if they can provide you with one, then you must go for it.
5. A small loan isn’t a smart option for loan repayment
Loan to repay the loan installment wouldn’t be an ultimate solution so don’t ever try this option. You might be tempted to take a small loan to pay off your monthly repayment amount but it will not work according to your requirements. So we will suggest you don’t do it. Clear your dues first before prioritizing you’re spending on other aspects and work in a responsible way so that all things could cover. Applying for additional loans will impact your credit score which will be in result of your poor banking history.