Extending sms loans can be an expensive story, especially if you extend the loan several times. The extension fee is as high as the ordinary sms loan rate and the reason why the interest rate is high is that the loan should be repaid within a short period of time, which is why you only need to extend the loan in an emergency.
But how do you do if it turns out that you can not actually afford to repay the loan on time? Isn’t the only solution to extend the loan so that you have more time to scrape together the repayment? It depends on how badly you have it, because in some extreme cases it is better to let the debt end up with debt collection rather than prolong it.
When you should extend the loan
If your finances are suddenly in crisis and it is impossible for you to repay your mortgage on time, you should extend it if you think you can repay it after the renewal period. You will certainly be able to pay an extension fee which can be quite high, but it is still better than the debt ending up with debt collection or paying the loan with another loan that has the same high interest rate.
Take a private loan – if you can
If it was only a temporary crisis because large unexpected expenses appeared, but you also have a good ability to pay, you might be able to try applying for a private loan with which you can redeem your sms loan. A private loan gives you a significantly lower loan cost than an extension does.
In the worst case – let the debt go to debt collection
If you do not have the opportunity to take out a private loan and you are almost completely certain that you will not be able to repay the loan after an extension or two, it is actually better to let the debt go straight to debt collection instead of extending it. It may sound silly to recommend people to let the debt end with debt collection but if you extend the loan even though you will certainly not be able to repay it even after the extensions, the debt will still end there.
The default interest rate, which is an annual interest rate, for sms with debt collection usually stands at around 30%, unlike the sms rate, which can be several hundred percent annually. So if you let the loan end up with debt collection directly instead of later, your debt doesn’t grow as quickly.