When people really need money and their needs cannot be postponed and they don't have savings or investments, the last resort is to take a loan. However, borrowers should be careful not to be trapped by high interest rates and short payment periods or tenors so that it will be difficult to pay off quickly, so the fines and interest will quickly increase, which will be very burdensome on personal finances. So, to pay off the first debt, you have to take out a second loan, etc., which ultimately leads to falling into a vicious cycle of debt. Here are several types of personal loans that should be avoided or only taken out in very urgent situations, such as:
1. Payday loans
Payday loans are one of the predatory loans which often only benefit the lender, which is a type of short-term loan or only a month that must be paid in full without installments and of course the APR is very high and very risky. Often the borrower cannot pay off the debt when the payment is due, so the borrower will take out a second loan to pay off the first loan.
2. Online Loans (mobile apps)
This online loan is very easy, you only need an ID card and the borrower's account number to receive money from the lender. Fees are not only charged by lenders but also app owners, so costs will be high, including interest and principal debt that must be paid when due.
3. Credit Card
Credit card holders not only have the freedom to shop but can also withdraw money from ATM machines with a limit below the maximum shopping limit. Cash withdrawals from credit cards not only charge interest but high admin fees, so if you often withdraw cash from a credit card, your bill will increase even more.
4. Pawnshop loan
Pegadaian can also provide loans to anyone easily, only with collateral such as gold jewelry, electronics, motorbikes, or other items that have economic value. It seems that pawnshop interest is not high, but borrowers will be charged high admin and capital rental fees, usually the loan period or tenor is no more than 90 days. So if the borrower cannot pay off the debt then the collateral will be sold.
5. Title loans
This is a type of short-term loan that guarantees proof of motor vehicle ownership, whether a car or motorbike, so that vehicle owners can still use their car/motorbike for their daily needs. This loan is very easy to get but has a high risk, especially if the borrower fails to pay, they will lose the vehicle. .
1. Payday loans
Payday loans are one of the predatory loans which often only benefit the lender, which is a type of short-term loan or only a month that must be paid in full without installments and of course the APR is very high and very risky. Often the borrower cannot pay off the debt when the payment is due, so the borrower will take out a second loan to pay off the first loan.
2. Online Loans (mobile apps)
This online loan is very easy, you only need an ID card and the borrower's account number to receive money from the lender. Fees are not only charged by lenders but also app owners, so costs will be high, including interest and principal debt that must be paid when due.
3. Credit Card
Credit card holders not only have the freedom to shop but can also withdraw money from ATM machines with a limit below the maximum shopping limit. Cash withdrawals from credit cards not only charge interest but high admin fees, so if you often withdraw cash from a credit card, your bill will increase even more.
4. Pawnshop loan
Pegadaian can also provide loans to anyone easily, only with collateral such as gold jewelry, electronics, motorbikes, or other items that have economic value. It seems that pawnshop interest is not high, but borrowers will be charged high admin and capital rental fees, usually the loan period or tenor is no more than 90 days. So if the borrower cannot pay off the debt then the collateral will be sold.
5. Title loans
This is a type of short-term loan that guarantees proof of motor vehicle ownership, whether a car or motorbike, so that vehicle owners can still use their car/motorbike for their daily needs. This loan is very easy to get but has a high risk, especially if the borrower fails to pay, they will lose the vehicle. .
