LOAN STACKING
By Paul Adama
It has become a norm these days especially with the state of the economy; civil servants, unemployed and self-employed individuals besiege loan companies or banks.
Loan stacking, by definition, means taking out multiple business loans from different lenders with similar repayment structures at once. It is common sense that, the more loans you collect to pay off other loans, the more indebted you are and the less prolific you become mentally, physically and financially. It takes proper planning and probably a miracle to unchain oneself from such financial shackles. Well, ‘we understand say country hard, but…’
When you go for Micro loans with short durations that range from a week to two weeks, you are almost certain of becoming stranded and automatically loan stacking, just to meet up with your loan settlements.
When you have an urgent need for cash, if you must collect multiple loans from an application or website or bank, it advisable that you exercise caution, be sure of the amount you need, the importance of your proposed expense and the duration you will need it for. A well thought out plan for accessing and repaying a loan facility will afford you peace of mind and a good credit reputation.
The advent of financial technology has moved loan repayments from monthly payment plans to weekly and in most cases even daily payments are a common occurrence. As you start to pile multiple loans with sequential repayment dates that all need to be paid out of the same pool of money, things can get messy really fast. And doing so puts you or your business in a phase of debt leading to unnecessary mental stress.
Loan defaults means your business or personal assets could be liquidated, your reputation tarnished, and your credit score will be damaged.
So, while stacking loans may seem like a smart way to finance your personal or business needs, the danger often outweighs the benefits.
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