However, this often backfires and borrowers quickly fall into the debt trap. The risks on the borrower side include flexible interest rates. These make it difficult to plan money within the period in which the loan must be repaid. Caution is advised here. Anyone who miscalculates and cannot repay can quickly drive up their borrowing costs.
You should also always keep an eye on the economic situation. In particular, inflation, which is currently 7.5 percent in Germany, ensures that money loses value. If money loses value, then loans also lose value. Borrowing money can quickly become really expensive. Rising inflation then causes the real interest rate for installment loans to go negative. A loan should only be taken out if it is really needed, consumer advocates recommend with a view to the current situation.
The combination of flexible interest rates and the economic situation can lead to over-indebtedness. This often ends in personal bankruptcy. Residual debt insurance can offer protection against the debt spiral. For example, if you become unemployed or become seriously ill, this insurance will take effect. In addition, debt counseling centers can be the first point of contact in the event of a difficult financial situation.