Most entrepreneurs have difficulty making efficient financial management. The consequence is the need to obtain loans for lack of working capital. In this situation, what do you do? One solution is how to consolidate a debt.
The idea is to gather all your debts into just one account. This is an attitude to facilitate the payment of credits obtained, which lessens their financial concerns.
Among the advantages of this modality are the payment of only one installment per month, the joining of all the credits in one and – best of all – the reduction of interest rates.
Want to take advantage of these benefits? So, read on to understand better about debt consolidation.
How to consolidate a debt?
This practice is also called reunification or unification of debts and is a strategy that helps avoid situations of financial insolvency and bankruptcy.
The process is quite simple: you hire a loan in order to pay off other credits or financing. By doing this grouping, you can borrow the money from an institution that covers a lower interest rate.
Of course to get this loan you need to fulfill some requirements of the financial entity. For example, you may be asked to own a property, even under a mortgage.
This is a good long-term solution that causes you to have fewer debt and pay a lower monthly amount. But you need to follow some tips to be more effective:
Have a good reputation
Debt consolidation requires obtaining a new loan, as we indicated. If your company has a reputation as a good payer, it is best suited for hiring this funding.
Take advantage of and take copies of your company’s monthly expenses to present to the financial institution and prove how much you can pay per month. You should also make a budget to find out the monthly amount available.
Look for options to lower the interest rate further
You can further lower the interest rate if you can make a guaranteed debt. In this case, you offer something like guarantee of payment. The advantage is being able to make tax deductions and get a lower share.
However, you must be sure that your company’s revenues will be able to honor that commitment. If it’s still not good for you, you’d better look for another institution that offers a more facilitated payment condition.
Know all the rates built into the plot
You must know all the fees that will be charged in the installment that will pay on this new loan. This is important, even if the monthly amount is lower.
By knowing all fees, you may find, for example, that you pay a reduced interest rate, but very high associated charges. That is, you win on the one hand and lose on the other.
The ideal is to compare with your current doubts and pay interest and lower charges. This will save you money.
Pay the new loan on time
This attitude is critical to maintaining your business reputation as a good payer and ensuring that in the future you can unify your debts and get more reductions.
To avoid contingencies, make more conscious decisions in your business and avoid making impulsive investments. It is best to keep accounts under control and to manage cash flow well by writing down all income and expenses.
Make projections and make sure the bills and the loan are paid. This is the best way to be efficient in your financial management and avoid delinquency .