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Keeping up with a debt payment, especially if it is one that involves a rather handsome sum every month, can be hard. If your due date is just around the corner you can get desperate sometimes about where you can source the money that you need. One option that some people might consider going for is to take out another loan to pay off the existing one. But is it a good idea?
Getting A Loan To Pay A Debt
If you’re only getting a loan to pay off an existing debt, the answer is no. You are not out of debt by paying off the previous loan. You are merely delaying something that is inevitable. It is even possible that you may be charged more for the new loan since you already have an existing one to begin with.
However, there are also instances when it makes sense to take out a new loan to pay off an old one. This is in the case of debt consolidation, if you happen to have several debts that you are paying on different dates of the month and for different figures, one good way of managing things better is to consolidate them into one single loan.
To do this, you will need to get approved for a loan that will cover all the remaining loan balances that you have. This gets rid of all the separate interest rates that you’re getting charged every month and could possibly pave the way for a more affordable interest rate for the new loan. This can also give you a little bit of wiggle room since you can spread out the payment.
What You Need To Know
Before you decide to sign up for this loan, however, see to it that you have calculated the costs involved, find out if the monthly repayment is something that you can afford too. This will only work if you can get your payments done on time. Otherwise, you will just be back into the old debt cycle again.
Have you applied for a loan recently and got approved? Well that’s a good thing for you! But wait, you changed your mind? And now you want to decline the loan but you already received it? Well, don’t worry because you’re not the only one who is experiencing that issue. Maybe because you’re expecting a pay check and will use it for some reason but you really need the money badly so you apply for the loan and then what happens next is your pay check and loan arrived at the same time. So what should you do?
Having Second Thoughts? Declining A Loan After Accepting It
If you haven’t received the loan amount yet through your bank account then maybe you can discuss your reason with your lender that you don’t need the loan anymore. However it will be better if you send them a written document explaining your reason. But declining a loan could be a difficult situation because lenders also make their time and effort to evaluate your loan application. If you apply for a refinance loan then there is still a chance for you to change your mind even if the documents are already signed. Legally, they will give you at least 3 business days to write a letter to the lender. Either way around, you still have to talk to your lender and if you’re expecting a pay check before you apply a loan and talk about it to your lender in advance then at least they’ll know your reasons if ever you change your mind to accept the loan. Who knows, they might give you some consideration.
If you apply for a student loan then here’s how it works if you want to cancel your loan. Usually they will give you 14 days to decide whether you’ll cancel your loan or reduce it.