Getting finance is a pretty common occurrence in the 21st century. From the 18-year-old college goer to the 60-year-old business tycoon, everyone needs funding for one purpose or another. This practice may have become more evident in the present, but it did not start here. Lending and borrowing money has been an ancient concept, being in trend since the inception of coins. Kings did it, and so did their subjects.
The purpose of taking financial aid is usually different for all of us, but the end goal is somewhat similar. The money earned is supposed to help the borrower improve his present condition, whether business or personal. That is the hope, a brighter and more prosperous future. Does it always come true? The truthful answer is quite painful. For everyone who acquires funding, the money does not come with good fortune.
Why is the count of Loan Defaulters on the rise?
According to a leading credit agency, an estimated 30% of the borrowers fall in the category of bad credit. There are only about a fifth of the money takers who have a perfect credit score. These figures seem shocking, but they are sadly true, at least in the year 2019, maybe this year will see a change in the creditworthiness of the borrowers.
There are numerous reasons as to why the borrower becomes unable to repay the amount he borrowed or has to jump several instalments. It is certainly not because he likes doing it, but because his circumstances don’t allow him.
- Financial Illiteracy; the majority of the times people borrow money in times of emergencies. At this point of time, the borrower’s mind is already so preoccupied with other things that he does not pay much heed to his loan agreement. As a consequence, he gets stuck in a perpetual cycle of debt.
- Unforeseeable Future; all of us are aware of the fact that whatever the future holds can never be known to man. The next times can bring with it the joys of the spring or the winter blues. Nobody can be sure. Therefore, if the borrowed money brings prosperity, you can quickly repay it. However, if it doesn’t, then my friend repayment will be a daunting task.
- Medical Problems; many a time, a loan is taken to pay for a person’s medical treatment. My friend did so to pay for his father’s heart surgery. That money was tinted with a bad omen as his dad did not survive the operation, and he lost the pillar of his family. Recovering from the grief of losing your father is severe enough, but doing so with a loan hanging over your head becomes an impossible responsibility.
- Business Failure; the business world is like a jigsaw puzzle; if you don’t know where to put the pieces, you will never win. Any business can fail, look at the aviation industry right now, with the majority of countries on lockdown due to the COVID-19, not many will want to travel. Without an income, the owner will never be able to repay the loan.
How do they improve their circumstances?
To err is to human. People make mistakes all the time. However, these errors cost a lot more when they are financial. Even if you have made a business blunder in the present, you can try to avoid it in the future by doing the following.
- Understanding of Your Loan Agreement; you have to keep your eyes and ears open when signing the loan agreement. If you think the interest rate is too high, object. If you believe the loan duration is also less and the instalment amount too large for you to pay every month, OBJECT. Realising your mistake too late is a primary reason for loan default.
- Being Prepared for Contingencies; as I said before, nobody can predict the future. However, one can certainly try to be prepared for the worst. For instance, let’s assume that you have taken a business loan for diversification. You will surely hope that the new venture will be a success, but that’s not enough. You have to consider its failure as well. If the new branch of the company does not succeed, WHAT THEN? It cannot and must not affect your credibility. A backup plan will help you to avoid the same.
- Managing Your Finances Wisely; don’t just think that once you have received the loan amount; the work is done. That is not the case, but rather the opposite is exact. Your work only begins when the amount is in your hands. Manage your money to the best of your ability. Don’t drain it at once; preserve it for later use as well.
Money Begets Money
Many say that for the rich, it is straightforward to make more money. Take the example of Kylie Jenner; she is the youngest billionaire in the world. How did she achieve this feat? Because her parents were already millionaires. Hence, the saying money begets money.
Now, what of the people, whose parents do not have millions in their bank accounts, how do they make money? The answer is simple by getting financed through banks and other financial institutions.
And the unfortunate lot? The people who are unable to get a loan from any bank. These are the people with bad credit history, and banks won’t even entertain them. There is an option for them. Someone is out there, who will readily help them. You must have heard of direct lenders, and these are usually online portals that will provide you with a loan even with a low credit score. An astonishing 10,000 pounds loan for bad credit can be availed. Isn’t this amazing?
A time of crisis always tries to suck you into its rock bottom. It is solely up to you to avoid drowning and change your fate and bathe in prosperity instead of hardships.
Description; The power of wealth is unlike any other, but money cannot outshine a man’s will to succeed. If he has decided to change his destiny, all he will need is a chance.