What Are the Debt Repayment Options for Me?

Paying off debt is not like getting into it. The repayment takes more time, effort, or extra money. And sometimes, it’s the combination of all three. This is why getting out of debt quickly and painlessly is like a dream for many debtors. They try all the techniques to get rid of the debt amount and live peacefully for the rest of their life.

We know it’s difficult but not impossible. The only thing is you should choose the right method to repay your debt. But, before that, you should get answers to the questions like how patient you are willing to be to pay off your debt, how much risk you are willing to take to do so, and if you understand the potential consequences of debt repayment options.

Based on the answers, you should choose one of the best repayment options from the following list. 

  • Paying It Yourself or As Agreed 

Typically, it’s one of the cheapest options to repay your loan. You will do everything yourself based on the agreement signed between you and your lender. There will be no third-party involvement as you will sort out everything with your lender.

This option is highly effective unless penalty rates and late or over-limit fees are involved. With no extra charges, you will pay what you owe.

  • Debt Management Program (DMP)

If your income is regular and interest rates are high, you should opt for a Debt Management Program through a non-profit credit counseling agency (CCA). The agency will help you pay off your debts with lower interest rates and better repayment terms. The agency has different ways to do so.

Some important things to know about the Debt Management Program is that the debt is paid off in 5 years or less and there are some reasonable fees involved. You shouldn’t worry about the fees as they get counterbalanced by the lower interest rates and elimination of late fees.

  • Debt Consolidation 

As one of the debt management strategies, debt consolidation combines multiple debts into a single monthly payment. It simplifies the payment schedule and provides lower interest rates than you are currently paying on your debts.

Repaying your debt with consolidation will not make the payment easier but keep you stress-free and reduce your amount as the interest rate will get lower. Also, you don’t have to keep the track of multiple loan statuses.

  • Debt Settlement 

When you settle your debt for less than what you currently owe with the promise that you will pay the settled amount in full, it is known as debt settlement. Sometimes, debt settlement is known as debt relief or debt settlement.

It’s a good option because the repayment amount is less and you get rid of the debt at once. Also, there is no legal involvement. Usually, the debt settlement is handled by a third-party company. But, if you want, you can do it yourself.

Of these options, Debt Management Program is the best followed by debt consolidation because both options reduce the interest rates. In the Debt Management Program, you get better debt repayment terms as well.

Debt Management Tips That Can Make a Huge Difference

At some point in time, we borrow money from someone to meet our urgent financial requirements. As per research, 70% of the entire population lives in debt. This could be a home loan, a personal loan, or owing money using a credit card. One of the major reasons behind this is the availability of loans as people find it easier to borrow money in order to fulfill their requirements.

Debts can help us to get a better education, purchase dream property, meet medical emergencies, or start a business. Although debt is considered bad, it can bring a huge difference to your finances when managed properly. However, when not managed properly, it can haunt you back. The most common perception about debt is that it is just another name for evil but if you change your outlook on debt, you will notice the other side of it. Debt can significantly benefit you if you opt for the right debt management strategies and disciplined repayments.

Here are some tips for those who are struggling with debt. Spend the next few moments reading below to manage your debts better.

  • Optimize Them All

If you are having several debts then it is time to sit down and optimize your debts. List all your debts, the outstanding balance, EMI of each one, the interest rates, and more. This provides you with an overview of your credits. You will know how much you owe so that you can manage your monthly budget as well.

  • Don’t Miss Payments

You can turn a good debt into bad debt by just skipping or missing a payment. Ideally, there is no concept of a bad loan or a good loan and all loans are similar. However, the payment habit of the borrower is something that makes a loan good or bad. Keep your loan a normal one rather than making it good or bad. Make sure to pay your EMIs every month on the fixed date. If the repayment amount is not fixed, make sure that at least the amount needs to be paid. Paying the EMIs regularly eventually leads you to the day when you will be able to declare yourself debt-free.

  • Prioritize Your Debt

Rates and tenure of different loans vary from one another. As aforementioned, one should optimize the debts to figure out which one is the costliest. Once you find out that, you can work towards closing that particular loan. This will reduce credit from your list and take you a step closer to being free from any debt.

  • Try to Refinance

Loan refinancing means taking a fresh loan in order to close the existing one. It is usually done when a person has more than one loan at a point in time and they are paying a lot of money on EMIs. One takes the loan that is equivalent to the total outstanding amount of all loans and closes all those loans through that new loan. This way, they need to pay only a single EMI instead of paying different amounts to different lenders.

Do you have any other doubts? Debt Management Services in UAE can make everything easier. Feel free to get in touch now to get answers to all your questions.

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