Informal debt, what makes a happy ending?
I am in need of some cash. Anyone out there willing to lend me?
After posting above status on the internet, that posting owner has already in the new debt and have to pay an interest almost a thousand a month.
This is not the first time that she is in debt and the urgent cash that she needs is for paying to another loan interest from the loaner that easily lets her borrow money without thinking that she may not be capable of paying back and now she is threatened to pay them back.
She is in this debt loop. The more she borrows, the more she is poor because she has to pay interest every month without the loan balance reduction and seems to have to pay them forever. This is because of her “misunderstood” about words as a 3% interest rate or 5% interest rate which is a rate per day, not an annual rate!
However, most informal debt loaner does not want to waste their time to collect their daily interest, so they set the rate at 20 - 30% per month while the highest rate from the financial institution is about 20 - 28% per year. This is an annual rate not monthly or daily as the informal debt.
So how to manage your informal debt?
For example: “Somrak” has an informal debt 20,000 Baht and has to pay interest rate at 20% per month and a whole debt in 1 year.
Interest that Somrak need to pay is calculated as below,
Overall interest = balance x annual interest rate x installment period (year)
or from the above example which is 20,000 x (20% x 12) x 1
Somrak have to pay overall informal debt interest equal to 48,000 Baht per year.
If Somrak changes to apply for a loan from banks or any financial institution, he does not need to multiply interest by 12 as the above example because showing interest rates is already an annual rate.
So, calculated from the most expensive rate from the regulation as 28% is still paying less than the informal debt which is equal to 20,000 x 28% x 1
Interest payment equals to 5,600 Baht per year.
As you can see that informal debt interest is very cruel. If you have many informal debts together with your forever-interest load, you should pay this debt as soon as possible and surely it could not be by your money. The best way is “to combine all debts” which is to summarize all high-interest rates to apply for a loan from any financial institute to pay them immediately and make an installment plan and payback to the bank with a lower interest rate. Also, shopping debt via credit card can be added and paid at once!
Being in debt is not shameful or illegal but you must make payments on time, decide how long an installment plan is and how much of each installment based on your capability. So, you need to save this money every month. There are many installment plans options for you to choose as you wish in order to keep your credit bureau clean.
Anyone who wants to pay the debt by combining them all as mentioned above, it is super easy! Just open SCB EASY mobile banking application, scroll down to loan menu and apply for Speedy Loan. If you are not SCB customer and do not have an application, you can fill out your details via this link and we will contact you shortly!