According to one of the largest debt charities, Step Change, one in three people in severe debt has a sub-prime credit card! But how can you avoid getting into debt in the first place? Refused Car Finance is a finance company in the UK that helps people who have debt or bad credit get accepted for a bad credit car loan. But having less debt and better credit can give you access to better loans and interest rates for a range of financial products. Read on to discover a handy list of how to avoid getting into debt in the first place.

Never borrow more than you can afford

When applying for loans or credit you should never take out more than you can afford. Loans and credit usually last between 1-5 years so it’s crucial that you are confident you will be able to meet your repayment deadlines over this time period. If you fail to meet your repayment deadlines, you can find yourself in serious financial trouble. Secured loans such as car finance also mean that failing to pay means the finance company has the right to take the car off you. Failing to make repayments can lead to defaults, County Court judgments, and bankruptcy, all of which make it very difficult to get loans or credit cards in the future.

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Pay more than the minimum repayment

Minimum repayments on credit cards can seem attractive but it means you will pay more interest in the long run. The minimum payment is based on a percentage of the balance, and it isn’t a fixed amount. If you can, you should try to pay off a good chunk of your credit card or store card each month. The quicker you repay, the less it costs!

Change your direct debit dates

If you get paid on a specific date each month, it can be a good idea to change your direct debits to coincide with this. Many people struggle to keep on top of their spending when they have direct debits that come out at different times each month. Scheduling most of your direct debits to come out a few days after payday can mean that you know exactly how much you have leftover.

Pay off your debts first

If you have high levels of existing debt, it can be hard to get accepted for credit or finance. Having debt can also lower your credit score. If you can, you should try to reduce the amount of debt you have before taking on any more. You can talk to your creditors about what is the easiest way to pay off your debts and make a budget to pay the money off each month.

Set a monthly budget

One of the easiest ways to avoid getting into debt is to have a budget in place. You can set aside money to pay off your bills, some money to put into a savings pot, and then have money for yourself to enjoy. If you can, you should always overestimate when planning your budget, so you have a little breathing space if anything goes wrong and you can avoid being penniless at the end of the month.

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Ask yourself ‘do I really need this?’

Spending money on yourself is one of life’s luxuries. However, if you want to avoid getting into debt, you need to be realistic. Next time you’re shipping you should ask yourself if you really need to buy it! Canceling direct debits that you don’t really need and not treating yourself to a coffee every morning can help to save you money and build up savings. You don’t need to miss out though, you could try an at-home ‘fakeaway’ instead of a takeaway and a movie night instead of a trip to the cinema!

Earn some extra cash

Earning extra income can be a great idea if you want to spend a little more money on yourself or if you want to reduce the amount of debt you have. There are lots of ways you can earn extra cash and save more money with little effort! You could consider selling some of your unwanted possessions, using cashback websites, take online paid surveys, start a blog, or review apps and websites for cash!