- Create a budget: Creating a budget is one of the best things you can do for your financial situation, regardless of your income or debt. Trying to manage your loan without a budget puts you in a position of vulnerability and confusion you don’t always know where your money is going or how much of it is going there.
- Pay On time: Making your monthly payments on time every month is the best way to avoid late fees and penalties as well as hits to your credit score. These are unnecessary and all-too-common consequences that will work against your financial situation, so be mindful of them and do your best to stay on top of payments.
- Pay More than your minimum: Following the same strategy of making an early initial payment, it helps to pay more than your monthly minimum when you can. Paying a little extra each month keeps you ahead of your loan term as well as provide you with some other financial perks.
- Consolidate your loans: For borrowers managing multiple personal loans, consolidation could be a great way to simplify your debt repayment. Debt consolidation is when you take out a single, large loan that can be used to repay all of your other loans and debt. Then, instead of making payments to multiple lenders each month with different interest rates and requirements, you will be making a single payment to one provider.
- Keep An Eye on your Credit Score: Lastly, keep a close watch on your credit score while repaying a personal loan. Your credit score plays a big role in your finances and has an important relationship with the loans you take out—your credit score will affect and be affected by your loans.
The Bottom Line
Debt is not our enemy. Bad credit habits are. Use credit well and use it wisely
- It’s easy to get into debt but hard to get out. If you borrow money, plan carefully how you will use your loan and how you will pay it back – and stick to your plans.
- Don’t borrow because others are borrowing. It is not wise to take a loan just because other people around you are doing so.
- If you don’t pay back, you might lose your security. This can be your house, land, vehicle, animals or salary.
- Don’t “dig a hole” to fill up “another hole”. If you are already struggling with debts, avoid taking another loan since this will only add to your debts and hence increase your burden.
- Protect your financial image. Do not despair or lose hope if you have difficulties paying back your loan. Consult with family and friends on how to handle the situation.
- Keep your financial history clean. If you take a loan from a financial institution regulated by the Bank of Uganda, you will receive a financial card. With this card, your repayment history will be recorded… The better your history, the better the loan conditions will be.
Two simple rules will help you control your debt i.e Don’t borrow more than you can afford to repay and Save money regularly for emergencies so you do not always have to borrow.