6 shortcuts to clearing informal debt and loans to close informal debt

Informal debt refers to debt arising from borrowing money among people without borrowing from financial institutions. This is because it is a convenient method and it is easy to find sources of funds, which is different from borrowing money from financial institutions that have complicated loan criteria. The interest rate for informal loans is 5-20% per month or 60-240% per year while borrowing from financial institutions has a maximum interest rate of 28% per year.

What do people usually do with informal loans?

“Instant cash, guaranteed, quick approval” is one of the advertisements for informal loans that has fooled many people into falling into the trap. The reasons people often borrow from informal loans are for consumption, medical expenses, children’s tuition fees, investing in businesses, paying off old debts, guaranteeing for others, gambling, vices, etc.

Of course, many people think that there is no other choice but to borrow from informal loans, which makes the already serious debt problem worse because they think it is “easy”. But little do they know that it comes with “danger” that will come to visit you as soon as you can’t pay in time.

Reasons for being in debt outside the system

1. Need for emergency money
   People have the chance to experience an event that requires urgent money, such as getting sick and needing treatment, natural disasters that require money to repair their house or car, or even losing their jobs and income. If they don’t have enough savings, they need to borrow money to spend. Many people often think of informal loans because they are easy to borrow, forgetting that informal loans have terrifyingly high interest rates.
2. There are various limitations, such as just starting work and having no assets
   The personal characteristics of the loan applicant are an important factor in the bank or financial institution’s loan approval. The loan applicant must be at least 20 years old when they are starting to build their careers. They may not yet have the ability to repay debts, and they may not have any assets to use as collateral for the loan application. Therefore, they need to rely on informal loans.

3. Having too much debt with financial institutions
   The first cause of having too much debt is spending behavior without thinking about your income or the amount of money in your pocket. You buy whatever you want, eat whatever you want, have no backup plan for emergencies, and are in debt beyond your means. You have already paid the minimum amount of your credit card debt and used that card to pay off this card, but your financial situation has not improved at all, which leads to being in debt beyond your limits and recovery, to the point where you are unable to borrow more money from financial institutions.

Shortcuts to Get Rid of Informal Debt
When you know the cause of being in informal debt, many people will have a history of late payments, stuck in a financial black hole, trying to find a way out, a light in life to escape from what happened. Can’t think of anything, want to fix it, which way to go?

If anyone has tried many methods and their financial life hasn’t improved, try studying the methods below. It will be a guideline to the financial light.

1. Reduce unnecessary expenses and avoid more debt.
   You can easily start by examining your daily spending to see what you spend on. What is necessary or unnecessary? If you can cut it out without affecting your life, you should cut it out.
   For example, shop less, cook for yourself instead of eating out, make your coffee instead of buying it from a famous shop, or reduce socializing to reduce expenses.
   It is also recommended to record your daily income and expenses so that you know what you spend extravagantly on. For those who have already cleared their debts, don’t be so happy that you think about creating new debts, especially informal debts.
2. Find additional income.
   You can start by working part-time on Saturdays and Sundays or doing OT in the beginning, then gradually look for ways to be more diligent. Or is there something that you can do as a side job? This depends on your abilities.
   Popular side jobs
3. Consult the bank, find a solution together, and change to debt in the system with lower interest rates.
   Currently, many banks have a way to help people with informal debts or loans to close informal debts. Keep coming out. Try to contact various banks to see what they can help you with, such as:
   – Apply for a personal loan.
   This can be done if you still have good credit or a history of repaying debts to financial institutions. Although the interest rate for personal loans is quite high, it is still cheaper than the interest rate of informal loans. Being in debt in the system is better than being in debt outside the system.
   – Use collateral.
   The advantage of a personal loan is that you can get money easily without collateral. However, if you still have a house, land, or car that is free of debt, you may want to try using collateral to borrow money because you will get a lower interest rate, which will help reduce your burden a lot.
4. Sell your valuables. When you get a lump sum, immediately use it to pay off your debts.
   Sometimes you need to sell some valuables to pay off the remaining debts. You should gradually sell non-income generating items such as jewelry, bags, branded shoes, and watches, or if it is really necessary to sell your car or house that is too big for you, you may have to do it.
   Don’t forget that the most important thing now is to pay off your debts first. After that, you can work and save money to buy a new one that is of a suitable price and size.
5. Negotiate with your creditors or refinance.
   If you start to realize that you have too much debt to pay off, the first thing you should do as soon as possible is to negotiate and talk to your creditors about the problems that have arisen. You may ask for an extension of the debt payment period.
   You can ask them to keep the same interest rate or reduce some of the interest rates. They also promise not to default and pay the remaining amount on time. Or refinance to another financial institution. Planning your debt repayment will give you a clearer picture of how long it will take if you pay off your debts according to the plan with discipline.
6. Borrow money from relatives or close friends to pay off your debts.
   When faced with problems on all sides Borrowing money from people around you, such as your parents or close relatives, to pay off debts is something that cannot be avoided. If you explain to them about your hardships and problems, your family will be ready to help as much as they can. Most importantly, once you have cleared your debts, you must maintain discipline so that you do not fall into debt again. No matter how close your relatives are, no one will be able to help you every time if you are still in debt endlessly.
   Now that you know the opportunities and reasons why people can get into debt, you will be more careful in your life. If you are already in debt, you should be more disciplined in your spending. Set a good repayment period, such as how many installments you will pay and how much each installment will cost. Set aside this money for immediate repayment every month. If possible, you should not get into debt at all.
   For those who are currently facing problems with informal debt, try to apply the methods that K-Expert recommends. I believe that this will be a guideline that will help many people escape from their overwhelming debt burden.
   The above story was written by Ekkachai Kotrasa, Kasikornbank. If you have any questions or need further advice or planning, you can consult with a K-Expert at Kasikornbank at K-Expert@kasikornbank.com.

3 Agencies for Consultation and Complaints on Informal Debt Problems
Informal debtors can seek consultation and complaints on informal debt problems at the following government agencies:

Introducing loans to solve informal debt
Government Savings Bank: People’s Bank Project loans to solve informal debt
Government Savings Bank offers “People’s Bank loans to solve informal debt” to alleviate the burden of informal debt.

Qualifications

• Employed, with income
• Aged 20 years and over, not exceeding 65 years when combined with the age of the loan repayment period

Details

• Loan amount not exceeding 50,000 baht per person
• Fixed interest rate, interest rate of 0.75% per month
• Maximum repayment period not exceeding 5 years or 60 installments
• Can use other people or assets as collateral

Contact to apply for a loan at any Government Savings Bank branch from today onwards or for more information, contact the GSB Contact Center at 1115

Krungthai Bank: Krungthai Jai Pam Loan
Krungthai Bank offers a loan for The Bag, instant cash, high credit limit, quick approval

Qualifications

• The general public with regular income
• Any occupation can apply, as long as monthly income is 15,000 baht or more
• Small business owners

Details

• Maximum approval limit is up to 5 times the monthly income, up to 1 million baht (borrow only as necessary and can be repaid)
• Interest rate 20-22% per year
• Quick approval within 1 day after submitting documents and the bank has verified the documents by 4:00 p.m.
• Choose a repayment period of 12-60 months
• No collateral or guarantor is required

Apply via the Krungthai NEXT app and the Pao Tang app from today onwards