A Debt Trap is usually the result of borrowing money mindlessly without even knowing about the ways that how to repay the debt. People find loans the most accessible means to fulfill their dreams, whether buying a house or a car or even meeting their medical needs. Due to these reasons, people are not able to avoid debt. But a debt trap is something that every person should know. If you are in a debt trap, you can get Free Debt Advice in Washington to get out of it. Following are some signs showing that you are getting into a debt trap.
Too Many Debts
You have too many EMIs to pay in a month when you owe several debts. When you pay so many debts a month, there is a risk of missing a payment, which can affect your credit score. If half of the monthly salary goes into loan repayments, you are in a debt trap.
Not only EMIs are villains, but when your expenses, bills, or house rent take over 70% of your monthly salary, you are also in a debt trap. It would help if you managed your expenses and it should not take more than 50% of your salary. And if you have no money to pay your EMIs, you are indeed in a debt trap.
Borrowing Money to Pay your EMIs
If you are spending all your income and still don’t have money to pay your EMIs, you choose to borrow money from your friends and relatives. Your lenders may not lend you anymore in the future due to your poor credit score, but the NBFC can lend you some money at a high-interest rate which will get you deep into a debt trap.
Having a bet on Your Future Income
If the sales of festivals thrill your mind to the extent that you decide to buy the product by raising a debt with an EMI that you will pay using your salary, you will get into a debt trap. How will you repay your debt if you lose your job or don’t have an increment in your paycheck? There are some products whose EMI increases after a few years.
Such interest rates can make EMI rise to 20%, which you would not be able to pay from your income. If you don’t have any other source of income, you will borrow money in the future and get into debt.
Credit Card
Credit card often lends money at high-interest rates, and having a chance of a low-interest rate on an amount is relatively low. And having a high-interest rate can decrease the repayment amount of your debt. Hence, this will make you fall into a debt trap. You can get out of the debt trap by contacting the Best Debt Settlement Arrangement counselors in Washington.
The Final Verdict
A debt trap will make you face several consequences, which can ruin your life. Once you are in a debt trap, it is tough to get out of it. It may take your life to get out of this trap. Beware while raising debts; otherwise, it can prove unhealthy for you. The right amount of debt can be healthy, but a vast amount can get you into a trap.