For some borrowers, we take out a credit card, get a loan, finance a car, and simply pay the payments each month, knowing we are paying some form of interest. Borrowing money, taking out credit is not free. Unless you get zero percent interest rates….which not many of us will receive.
So we know borrowing can be costly, especially if you receive a high interest rate on a loan or credit card.
I have written about this before, debt can be costly.
There can even be fees and charges for someone to pay off a loan early!
I have been hearing from people more lately about fees, and charges, and high interest rates they are being charged, especially if they have missed payments, are in arrears, or have defaulted on loans.
The possible reason I am hearing about this more and more is due to so many people being furloughed, or losing their jobs due to the lock downs and pandemic.
With this now sort of behind us, more jobs are becoming available and we are trying to get back to the new normal.
Most banks and lenders during those times did work with their customers and borrowers, allowing them to pay what they could, or make token payments, or even offered a breathing space of no payments at all for a period of time.
While this is all good to help people, there is a cost, if the interest being charged is not frozen, the balance on the account will rise, it will go up due to no payments or reduced payments being made.
The borrower’s credit score will also be impacted, which in time can cause them to have a lower credit score, which over time can cost them more in the form of higher interest rate loans if they borrow in the future.
Being in debt is not cheap, as they say.
As I have been advising some, worrying about the future of your credit is stressful, and futile. You need to deal with the here and now aspects.
Debt be not proud!