Modality widely used by financial institutions, especially in times of crisis. And it is a procedure that can be very useful for those in debt.
The idea is to offer a product with lower interest rates, so that the client can pay off any debts with the institution. Speaking like that, it sounds simple and tempting, but be careful.
There are no miracles in the financial market and somehow you will remain indebted to the institution. The important thing is to ensure that this debt fits your budget, otherwise the problem may even get worse. Here are 5 mistakes you can’t make when renegotiating your debts:
1. Adopt longer terms
An unknown trap in loans is their repayment terms. Most people think that only the interest rate increases the final cost of a loan. But in fact, long terms also burden the loans. This is because the interest rate stretches over time and makes the final cost higher than expected.
Therefore, if you are negotiating, do not extend the payment term beyond what you had originally contracted. If this happens, you may even pay less per month, but you will spend more at the end of the operation.
2. Fall into the trap of married sales
Not all institutions act appropriately in renegotiations. One example is those who practice selling in a way, taking advantage of the desperation of the customer who is in debt. Thus, managers place another product as an insurance or capitalization bond as a condition for renegotiation.
In addition to being detrimental to your financial health, married selling is a crime. If you are a victim, report the institution immediately.
3. Go back into debt
After renegotiating, you should review your budget. After all, if you were in a debt situation, it meant that your finances were not healthy. If you are not careful, you can go through the same situation again in a short time.
4. Choose the wrong debt to renegotiate
If you are in debt in different situations, it is best to choose the largest to renegotiate. In general, the most expensive debts are those related to credit card and overdraft. If you owe a lot on these products, prioritize the renegotiation of these debts over others.
5. Not checking the total cost of debt renegotiation
It is not just interest rates that are included in a renegotiation transaction. The financial institution charges various charges for its products. All of this must be recorded in the contract on a consolidated basis.
To find out how much you are paying for the operation, see the Total Effective Cost. You may be paying for renegotiation more than was broken down in your previous debt. At Just, the advertised rate is always Total Effective Cost and you never have any surprises.