Rising debt is a common problem among millennials and Generation Z. The rising cost of living is constantly pushing people on the verge of debt. One of the reasons is quite obvious that people are struggling to squirrel away for a rainy day, but the other side of the coin also says that the rise in wages does not proportionately rise to the cost of living.
Most of the people are forced to keep taking on debt because they are unable to keep up with their expenses. As small debts are very expensive and they are usually required to be paid down on the due date, it can be quite difficult to tackle the debt. You will end up rolling over the loan and eventually be up to your neck in debt.
Once you have racked up your debt, your lender will send your account to a collection agency. They will be liable to recover money from you. Under no circumstances can you beat the rap. You are obliged to pay back what you owe, no matter what. Even if nothing is secured against the loan, you might have to sell your assets to clear the debt once the matter is taken to court. You cannot refuse to obey the court’s verdict.
In order to deal with this situation, you think of consolidating your debts. Debt consolidation seems to be the best option when you have multiple personal loans to pay off. Consolidation loans will help you club all your outstanding expenses and pay them off outright. Once you have all your loans paid off, you will have only one large personal loan to pay off. Although this seems an easier option, it is not. You must have a good credit score to qualify for these loans.
The fact is that whatever the solutions are available to you, they are not very easy. The rising debt is a serious problem, but now technology is helping you get out of debt.
New start-ups are using technology to help people deal with debt
A lot of start-up companies have come forward to help people tackle debt after analysing their spending behaviour. These start-ups are acting as spending advisors. Research has found that young people are more open to the use of technology. You can use various types of digital tools that can help with monitoring cash.
With the help of digital tools, you can get a clearer view of your financial situation. You can understand how much cash is coming in and how much is going out. You will take a better view of your spending. New mobile apps are also best known for making a helpful budget, notifying you when the balance is low in your account, categorising your expenses and creating saving goals for different purposes. Technology is actually providing the best way to deal with the debt.
AI helps manage spending and debt
AI has taken the finance industry by storm, especially for lenders, as they can quickly shortlist the applications of many borrowers immediately. It is very easy to check the eligibility of borrowers to repay the debt, but AI is not just helping lenders but borrowers as well. Banks and private lenders are increasingly introducing mobile technology so you can stay on top of your expenses. You can easily track your sending and existing debt.
Many AI-featured apps help people with budgeting. You can easily create a plan around your spending. You can also get information about your debit and credit card. When all transactions are in one place, you can easily ensure your control over your spending. These apps can also help you keep an eye on your credit score.
Apps can help you stay on top of your credit rating as they can notify you when your spending will negatively affect your credit score. Many apps will put emphasis on data security. You will be notified if any suspicious changes are made to your credit score.
The technology ensures an advanced system
The finance industry has recognised the need for digital tools to help with consolidating debts as well. For instance, if you are looking to take out consolidation loans in the UK with bad credit, you can find out if it is actually an effective solution. Lenders and mainstream financial institutions can use technology to review your financial situation and provide you with a tailored solution.
Financial institutions can manage borrowers without a lengthy and tortuous manual process. Getting approval for a loan is no longer a lengthy or complicated process. Even if you are to take out small loans like guaranteed loans from direct lenders to finance your emergency expenses, advanced tools can let lenders understand your true financial condition. This is how they are able to provide you with tailored solutions.
When you get personalised finance solutions that match your requirements and current financial condition, you will see less impact and burden of debt on your living cost. This is how it will help you stay out of the debt trap.
The technology ensures increased security
Since lending is done online, security is always a concern among lenders. Data of all borrowers are kept online. Chances are scammers can find a way to access it and cause multiple frauds. This is highly crucial to protect the data of people, and here comes the role of technology.
This is why the finance industry is known as FinTech. Advanced technology has become an integral part of the lending industry. This can quickly help you to make it convenient for you to borrow money.
The bottom line
Technology can help tackle rising debt in many ways. With the help of apps, you can create a budget, track your spending, build an emergency cushion, and keep an eye on your credit score, too.
Lenders also leverage technology to provide you with tailored solutions, so you do not end up borrowing more than your affordability. Technology is making lending practices more convenient and ethical.