When it comes to obtaining money, many people know how to use their creativity and imagination. A stressful financial dilemma can indeed compel a person to use different resolution methods. One risky yet popular method is debt cycling or, simply, the process of getting a new loan to repay a previous one. If you’re not careful with this strategy, you’ll sink in a pool of debts. Yet, despite the warnings of many financial experts, you can use debt cycling to your advantage.
These simple methods will let you capitalize on debt cycling:
Invest a Portion of the Loan
Some borrowers prefer to pay off their loans whenever they have money. This is the right strategy but you can also benefit from investing a small percentage of the loan. There are many options for investment such as online asset or new side hustle. It all depends on how quick you want to receive your profits. Once your assets are generating residual income, you can repay all of your loans and finally break free.
Pursue Loan Consolidation
Loan consolidation is a great strategy if you have multiple debts. By consolidating your loans, you will only pay one interest rather than multiple streams. Keep in mind that not all lenders agree with consolidation. You also need the expertise of a loan consolidation office, and thus may cost you. A proper loan consolidation tactic can make your debt cycling strategy work, but you still need to be vigilant over rising fees.
Negotiate with Lenders
When all else fail, you should try negotiating with your lenders. Give them promise dates and convince them that you can repay quickly if the interest rates are lower. If the negotiation is successful, your loan burdens can be lifted. Lender negotiations are not always successful, so you need to manage your expectations. It’s important to have a backup plan whenever negotiation turns sour.
Debt cycling can only work for you if you’re financially disciplined or you don’t have too many mouths to feed. For the future, don’t apply for multiple loans – just settle for one loan and strive hard to raise your income to a considerable level.