Five Adverse Effects of Being in Debt
There are three very common sources of debt: student loans, home loans and credit cards. Student and home loans typically cause the most debt, since borrowers are required to take out large loans for these payments. How long someone remains in debt primarily has to do with how much money they owe. Student debt can take anywhere between five to 10 years to fully pay off, with home loans taking even longer. Credit card debt can generally be paid off within a few years, although there are some severe cases that may take even longer. No matter what the source of debt, there are several negative side effects that come from owing money.
High Interest Rates in Ohio
One of the hardest parts about being in debt is not sinking further into debt. Borrowers that cannot pay off their debt will likely have to borrow additional money to cover other costs in their life. It is still possible to take out additional loans while already in debt, and it is not uncommon for borrowers to have several different loans which they are paying off. Getting a good deal on new loans is significantly harder for anyone who is already in debt. Borrowers that already owe a lot of money are seen as being high risk. To counter the risk these borrowers present, lenders increase interest rates. These rates are proportional to how much a borrower already owes and how long they have been in debt.
Credit and Loan Denials in Ohio
Borrowers may request a loan or sign up for a credit card while they are in debt, but there is no guarantee that they will be approved for it. Depending on the level of debt, these borrowers may be denied new credit cards or loans until they have paid off their existing debts. In these situations, the only thing that borrowers can do is look for a different loan or credit card provider.
Difficulty with Contracts
There are several different types of products and services that require you to sign a contract, which are much harder for Ohio residents to do if they are in considerable debt. Excessive debt can impact a credit check, which is a requirement for anyone looking for a new apartment. Applicants that are severely in debt may not be able to pass the credit check and may be denied a lease. Even applicants that are accepted into a new apartment may struggle to find utility providers that accept them because of their debt. While outright denials are somewhat rare, these applicants will likely have to pay some kind of security deposit or offer up collateral before being offered services.
Another difficulty that applicants in debt have is finding insurance plans. Insurance providers can be very particular about accepting applicants with debt. Finally, residents in debt may have a difficult time with cell phone contracts. If a cellphone company denies an applicant, his or her choices are to go to a different provider or purchase a prepaid phone. Applicants may be able to work out a deal with the provider where they lease a plan, but this usually leads to significantly higher payments in the long term, which is the last thing that individuals in debt need.
Employment Denials in Ohio
There are some instances where applicants that are in debt may have a difficult time finding work. Any job that involves finances, such as a managerial position, may disqualify applicants based on their credit rating. Anyone who is trying to start his or her own business while in debt will also have a much harder time getting started.
Stress from Debt in Ohio
Not all of the adverse effects from debt are physical. Being in debt is very stressful, and it is very common for borrowers to feel trapped because of their debt. Unfortunately, climbing out of debt is a very long process, which takes several years. It involves making a lot of slow payments, and it is not uncommon for borrowers to fall into debt with other providers while trying to pay off their original obligations. Some borrowers also become increasingly paranoid about spending any money for fear of falling further into debt, which causes them to neglect important purchases necessary for their day to day life. Anyone that is in debt is strongly encouraged to work with a professional debt management team. Not only can they help dealing with debt directly, but they can provide some peace of mind as well.