LOANS DIRECTLY MANAGED BY PERSONAL ACCOUNTS

It is very difficult for most individuals to make outright payment for properties like a luxury car, homes and other assets. This brings to the fore the necessity for loans. Some persons are afraid of applying for a loan, but as far as loans are concerned, with a workable repayment plan, there is nothing to worry about. Becoming debt free requires a great deal of effort. You must demonstrate a committed effort towards servicing the debt, this varies from person to person and it depends on the extent and type of debt. This is why loans directly managed by personal accounts is recommended.

Before you apply for any loan, you must have a comprehensive understanding of the terms and conditions applicable. It varies depending on the type of loan and its duration. Always bear in mind that you are paying back the capital and interest.

If it is a mortgage for a home, understand the nature of interest. Is it variable or fixed? You need to know how and when the changes are effected. Although most mortgages repayment plan is spread over a 30 years period, there might be some variations.

For example, you should know what percentage of your monthly payment is used in the servicing of the principal and what portion is used in servicing the interest. For loans directly managed by personal accounts, it is recommended that deductions are made before you begin spending from your gross income. To achieve this, your gross payment can be made to an escrow account, then deductions are made prior to your having access to the funds. It is all about discipline and paying attention to details.

For credit cards, you must be responsible with respect to terms and conditions of usage. It could be tempting to use the credit card to purchase items that you cannot afford right now, but bear it in mind that with high interest rates and the fact that interest compounds, you might end up paying much more than the price of the item.

Nevertheless, repayments can be effectively managed by loans directly managed by personal accounts.  Always leave a minimum balance in your checking account so your credit card company can make the applicable deductions from that account as at when due.

It is worthy of note that some credit card providers send checks to their clients. These checks can be used with ease and as far as your provider is concerned, this is an advance payment which comes with a higher interest rate. So when you receive such cheque via the mail, shred them immediately so you are not tempted to use it.

In summary, whatever credit facility you are about to subscribe to, always link it to your checking account. By doing this, your creditors will be able to make direct deductions from your account. Act responsibly by funding this account regularly. It is recommended that you use your monthly payment account for this purpose. It is easier that way. By this, the principle of “loans directly managed by personal accounts” will be effective.

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