What to consider when renegotiating a debt?

If a debt is compromising your budget beyond the account, renegotiating it may be a good decision, but you need to pay attention to some important points.

We always talk: getting rid of the most expensive debts should be the priority of those who seek to keep finances up to date. And a simple action that can optimize this process is to renegotiate debts with creditors. In addition to giving consumers more peace of mind, debt renegotiation can also generate savings at the end of the process.

 

Know your debt

Know your debt

What is her updated value? What fees apply? How many installments are left? Having these answers on the tip of your tongue – and duly noted in your financial spreadsheet – is critical to start thinking about trading. In this step, it is also worth reading the contract you signed with the lender. If you don’t have one yet, it’s time to run after it.

 

Know all about your income

Know all about your income

The money to settle them needs to go somewhere, and no matter how renegotiated, you will still have a continued commitment to your income for some time. List all of your fixed income and expenses, and do a forecasting exercise to consider everything you need for the coming months.

Then yes, you are able to meet with the lender to review how the debt will be repaid. Run installment payment simulations, divide more often, check the first installment payment deadline, ask about the cash discount. And ask for a deadline to think. Yes. You can and should take the time to consider possible scenarios before hitting the hammer, no matter how much the lender pressures. This is an opportunity to calmly consider the proposal and also consider alternatives, such as hiring new credit to pay off debt.

 

Exchanging one debt for another can be advantageous

Exchanging one debt for another can be advantageous

If your lender’s proposal is not as good as expected, you may consider hiring a new credit to pay off this more expensive debt. It may seem contradictory if you get into debt again during the time of renegotiation, but if this new debt has lower interest rates than the lender’s proposal, it may be more advantageous. Especially if the offer of the first lender considers a good discount for the repayment of the debt.

Take, for example, the interest rate on unsecured personal loans, one of the most common loans here in Brazil. In July, the average interest rate of this type of credit was 8.33% among the 64 financial institutions observed by the Cream Bank of Brazil. In the same period, the Real Estate Credit could be contracted with an interest rate of 1.22%, plus the correction of the IPCA.

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