A loan with debts is not as unusual as you might think at first glance, almost everyone has ongoing obligations, be it from rental and telecommunications contracts, which in this sense – due to the terms of the contract – also represent a debt. Existing financing, for example for a home or a car, does not have to prevent a new loan, which would then be a loan with debts.
Calculation of credit with debt
Basically, the entire credit burden for credit with debt must be considered. So it does not matter whether a loan is only taken out from one creditor or from several banks, it is shown in the Credit Bureau anyway, so that a new lender is informed about the old debts. The Credit Bureau-free loan seems to offer a way out, but this must also be repaid. So if you take out a loan with debt, you have to keep an eye on the overall situation and ask yourself whether you can pay off several installments in the required amount. Sometimes debt-rescheduling is a more elegant way.
The new loan then only comes from a bank. The view is also presented that a loan with an installment that is always paid on time is not a debt in the sense, but only a liability. You would only be in debt if installments could not be paid. This is a euphemistic play on words, loans are generally debt. The problem is that in an emergency, several loans can no longer be paid and several creditors make claims at the same time and also give it a certain emphasis.
It is easier to negotiate with one creditor than with several. The borrower may then be faced with the choice of which installment to pay, which may not, so there should be the slightest hassle. Such decisions grow very quickly over a person’s head. Therefore, caution is advised when borrowing a loan.
When problems arise
The financial situation can fundamentally change for everyone. Unemployment, illness, family events, and a weakening business situation for the self-employed are the main causes of financial crises. For this reason, long-term calculations are recommended for every loan. Sometimes current loans can no longer be serviced, a new loan is taken out to escape the dilemma. This way out can lead to a precarious dead end. In this case, the solution is a new loan, but with the strict aim of debt restructuring.
The rates have to be reduced if the current income is not sufficient to pay. A new loan can even be taken out with debts and more cash available if the goal is only to reduce the total monthly charge to an acceptable level. This can be annoying in individual cases because an old loan might have been paid off in a few years or even months, but if the rate is not feasible, there is no other way but to reduce it and thus extend the term.
This even costs additional interest, because a longer term generally increases the annual percentage rate. Under these circumstances, a loan with debt would also have to be taken out in a problematic situation.