Loan cycling is the common practice of using loans to fund any other substantial loans you have. Most financial experts will advise you against this practice and they’re often right about it. However, there’s a better way of cycling a loan for your advantage. If you want to cycle a loan, you have to apply some tactics methodically.
Take Account of All Loans and Their Lenders
Every loan is unique in terms of amount ceiling and agreements imposed by the lender. Tracking down multiple loans can be stressful, so you need to weigh your priorities. Can you repay all the combined amounts of the loans? What loans should you offset first? Can you renegotiate better terms with the lenders? Loan details and lenders shouldn’t be taken out of the equation anytime.
Use a Loan to Generate Additional Income
To cycle your loans properly, you can use one or few loans to generate a new source of income. Your job won’t be able to pay off all loans since you probably have necessities to cover. Why not use a loan to get a freelance gig? The payoff can then be used to fully repay other loans you have. Additionally, you’ll have more spending choices.
Pay Off Loans Diligently
The mortal sin of every borrower is not paying any loans. This is the dilemma of many people around the world, and their financial states are train wrecks. Be diligent in your repayment plan. Every day, remind yourself about your payables and do your best to hustle for repaying your loans.
One of the difficulties of loan cycling is the amount of details that you have to juggle. Lose a grasp on any of these details and you’ll be in a financial trouble. So, before cycling a loan, it’s better to create an efficient management and repayment system first.